Free Online Course in International Business

Knowledge Statement

Knowledge of Methods of Funds Remittance: Checks, Banker’s Drafts, SWIFT Transfers

Activity

This activity is designed to negotiate and debate risks associated with funds remittance.

Instructions to Instructor

1.                     Divide the class into even groups of 2 -3, half being buyers and half being sellers.

2.                     Select a country for each group to represent.

3.                     Connect a group of buyers with a group of sellers and provide each set with a method of payment of prepayment or open account.

4.                     Have them discuss the risks of each of the funds remittance methods and the risks associated with each.

5.                     Have each group negotiate and agree upon a method of funds remittance.

Assessment

1.                     The SWIFT System is

a.      a type of bank guarantee to ensure payment.

b.      the law governing funds remittance.

c.       a method to communicate payment information between banks.

d.      used to get the best US dollar exchange rate.

2.                     Funds remitted through a company check, drawn on a foreign bank will arrive in the seller’s account

a.      immediately after the seller deposits the check.

b.      when the foreign bank confirms and remits funds.

c.       2-3 business days after the check is deposited.

d.      after the buyer deposits the funds and approves transfer.

3.                     A wire transfer is used to remit funds

a.      in a quick manner under the sales agreement.

b.      before the goods are shipped.

c.       before the goods arrive.

d.      after the documents are sent.

4.                     Funds remittance and methods of payment are

a.      are the same thing and can be used interchangeably.

b.      never used together since they are confusing to a buyer and seller.

c.       are used only in international transactions.

d.      used together to ensure timely payment between buyer and seller.

(Correct answers: 1=c, 2=b, 3=a, 4=d)