Free Online Course in International BusinessOpen AccountOpen account occurs when a seller ships the goods and all the necessary shipping and commercial documents directly to a buyer who agrees to pay a seller’s invoice at a future date.
Combining Methods of PaymentThe important thing to remember about methods of payment is that they are not absolute. They can be combined in many ways to reduce risk for all of the parties involved. For example, should a new customer require custom made products, but cannot afford 100% prepayment, an exporter could offer 50% prepayment to cover the cost of manufacturing and 25% payment at invoice date and 25% payment 90 days after invoice.SummaryHaving completed this lesson, you should be able to describe the methods of payment available for international transactions and the situation when each is appropriate. You should understand when payments will be made and the risks associated with each method of payment both to the buyer and the seller. Finally, you should know the benefits of agreeing to a particular method of payment and what kind of financing options it may or may not provide for the buyer and/ or seller.ResourcesPublicationsExporting from Start to Finance 3rd Edition, L. Wells and K. Dulat, McGraw Hill.International Trade: Financial Services for Importers and Exporters, JP Morgan/Chase Bank, 2000. Handbook of International Credit Management, second edition, edited by B.W. Clarke. Gower Publishing, 1995. Practical Export Trade Finance, E. W Perry, Dow Jones Irwin, 1989. Web ResourcesLetters of Credit:• www.chase.com (FAQs) • www.informafinancial.com • www.allbusiness.com • www.qualitylc.com Attachments Letter of Credit Application Sample L/C Collection Form Payment Comparisons
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