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What is a Letter of Credit?

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A Letter of Credit is a financial document issued by a bank guaranteeing payment to a seller on behalf of a buyer, provided that the seller meets the specified terms and conditions.

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What is an invoice?

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An invoice is a document that itemizes and records a transaction between a buyer and a seller, detailing the products or services provided, their costs, the total amount due, and payment instructions.

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What does 'maturity date' mean in a bill of exchange?

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The maturity date is the date when the payment specified in the bill of exchange is due.

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What is a Debit Note?

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A Debit Note is a document issued by a buyer to a seller, indicating a reduction in the amount owed, often due to returned goods or overbilling.

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What is a Receipt?

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A Receipt is a document that serves as proof of payment for goods or services received.

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What is a Credit Note?

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A Credit Note is a document issued by a seller to a buyer, acknowledging that a certain amount has been credited to the buyer's account, often due to returns or discounts.

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What is the purpose of a Purchase Order?

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A Purchase Order is a document sent from a buyer to a seller, indicating the types, quantities, and agreed prices for products or services.

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What is the difference between a Debit Note and a Credit Note?

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A Debit Note indicates a reduction in the amount owed by the buyer, while a Credit Note indicates a reduction in the amount owed to the seller.

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What is the role of a bank in international trade?

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A bank facilitates international trade by providing financial services such as Letters of Credit, which ensure that sellers receive payment.

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What is the significance of the payment terms in an invoice?

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Payment terms specify when the payment is due and the methods of payment accepted, helping to manage cash flow and expectations.