Financial policy in exports - International payments

7 important questions on Financial policy in exports - International payments

How can maximum security be achieved when it comes to international payments?

Only with the addition of export credit insurance.

Which method of payment offers the greatest security?

Advance payment (prepayment)

What are the most commonly used methods of international payment?

  1. Payment in open account
  2. Payment against documents
  3. Credit against documents
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What is payment in open account?

An open account transaction means that the goods are shipped and delivered before
payment is due, usually in 30 to 90 days. Obviously, this is the most advantageous
option to the importer in cash flow and cost terms, but it is consequently the highest
risk option for an exporter. B

What is credit against documents?

Credit against documents or a letter of credit is a commitment by a bank to pay the seller the amount of the purchase or accept bills of exchange or have them accepted or negotiated against submission of the documents as prescribed in the credit agreement (and after all other conditions have been met).

Which methods of international payment is advisable when trading with countries outside Europe or North America?

Letter of credit (L/C): this is a document issued by a financial institution, or a similar party, assuring payment to a seller of goods and/or services.

Name 6 examples of things parties can agree on when it comes to international payment

  1. Delivery terms
  2. Delivery time
  3. Transhipment
  4. Partial shipment
  5. Packing
  6. Destination

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