PAYMENT SYSTEMS USED IN INTERNATIONAL TRADE

There are five procedures of payment that used in International Business.

  1. Advance Cash:

In advance cash procedure first importer (buyer) send products or goods after ensuring the payment by exporter (seller).

This method of payment is more risky for importer and less risky for the exporter.

  1. Open Account:

An open account means that importer (buyer) pay the cost of the goods or products after that good have shipped by the exporter (seller).

In this technique is the sells agreement where the products are transported or shipped before their payment is outstanding which is generally thirty to ninety days period.

  1. Consignment sales: (Sales Of Written)

The consignment sales is a trading agreement in which exporter/seller send goods to buyer/importer but buyer only pay when goods and products are sold.

The seller remain the owner of the goods until they are paid and after a certain period exporter (seller) takes back the goods.

  1. Letter Of Credit: (Credit Memorandum)

A Credit memorandum is a agreement, in which the buyer ‘s bank assured the seller’s bank in which the owner represents the invoice and payment will make on due date. A guarantee from importer bank that importer (buyer) will pay if they don’t pay the bank will pay on behalf of buyer.

 

Leave a Reply

Your email address will not be published. Required fields are marked *