Chapter 7 TERMS OF PAYMENTLEARNING OBJECTIVES At the end of this chapter, the student should: 1 Identify alternative terms of payment in international trade. 2 Understand the advantages/disadvantages of securing payment through cash in advance 3 Understand the advantages/disadvantages of securing payment through the use of open accounts. 4 Understand the advantages/disadvantages and procedures of securing payment through letters of credit. 5 Understand the procedures in documentary collection in international trade. 6 Understand the procedures in the use of purchasing cards, procurement cards, credit cards, trade cards, and bank guarantees in international trade. 7 Understand the strategic advantages of using the proper method of payment. PREVIEW This chapter helps exporters achieve a major goal: getting paid for an international shipment. It focuses on the strategic dimensions of payment terms—for instance, how demanding cash in advance for a product can put an exporter at a competitive disadvantage. We will look at law applying to payment terms and will direct considerable focus to the processing of a letter of credit as a term of payment.
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