comparative view on different method of payment from importers and exporters point of view

2. 1)Cash-in-Advance:-
With cash-in-advance payment terms, an exporter can avoid credit risk
because payment is received before the ownership of the goods is
transferred.
2)Letters of Credit:-
Letters of credit (LCs) are one of the most secure instruments available
to international traders.
A letter issued by a bank to another bank (especially one in a different
country) to serve as a guarantee for payments made to a specified
person under specified conditions.

3. 3)Documentary Collections
A documentary collection (D/C) is a transaction whereby the
exporter entrusts the collection of the payment for a sale to its
bank (remitting bank), which sends the documents that its buyer
needs to the importer’s bank (collecting bank), with instructions to
release the documents to the buyer for payment. Funds are
received from the importer and remitted to the exporter through
the banks involved in the collection in exchange for those
documents. D/Cs

5. 4)Consignment:-
Consignment in international trade is a variation of open
account in which payment is sent to the exporter only after
the goods have been sold by the foreign distributor to the
end customer
5)Open Account:-
An open account transaction is a sale where the goods are
shipped and delivered before payment is due, which in
international sales is typically in 30, 60 or 90 days.

6. Least Secure Less Secure More Secure Most Secure
Exporter Consignment Open
Account
Documentary
Collections
Letters of
Credit
Cash-in-
Advance
Importer Cash-in-
Advance
Letters of
Credit
Documentary
Collections
Open
Account
Consignment

9. documents against payment (D/P)
An arrangement under which an exporter instructs the
presenting bank to hand over shipping and title documents
(see document of title) to the importer only if the importer
fully pays the accompanying bill of exchange or draft. Also
called cash against documents.

10. Letter of credit
• a letter issued by a bank to another bank (especially
one in a different country) to serve as a guarantee for
payments made to a specified person under specified
conditions.

12. Document against payment
• An arrangement under which an exporter instructs
the presenting bank to hand over shipping and
title documents (seedocument of title) to the
importer only if the importer fully pays the
accompanying bill of exchange or draft. Also called
cashagainst documents.

13. What is the meaning of documents against
acceptance?
An arrangement in which an exporter instructs a
bank to hand over shipping and title documents (see
document of title) to an importer only if the
importer accepts the accompanying bill of exchange
or draft by signing

14. shipping and title document for importer
Bill of lading
Certificate of Origin
Commercial Invoice
Dock Receipts
Insurance Certificate
Packing List
Shipper's Export Declaration (SED)

15. Bill of loding

16. Bill of exchange
• A written, unconditional order by one party (the
drawer) to another (the drawee) to pay a certain
sum, either immediately (a sight bill) or on a fixed
date (a term bill), for payment of goods and/or
services received. The drawee accepts the bill by
signing it, thus converting it ...

17. Bill of exchange

18. s.k shahi