XNK2&3

Which payment method is the riskiest for the importer?

• payment in advance

• document collection

• consignment sales

• open account

Which payment method is the most risky for exporters?

• Payment in advance

• Document collection

• Sales under contract

• Open account

... the issue of issuing letters of credit at the request of the buyer.

• The buyer issues the letter of credit.

• The seller issues the letter of credit.

• The notifying bank

• The issuing bank issues the letter of credit.

... ensure that the beneficiary (the seller) is notified, the credit is delivered, and the authenticity of the credit is clearly guaranteed.

• reimbursing bank

• issuing bank

• notifying bank

• confirming bank

... is a payment method in which the bank of the importer commits to honor a draft when specific documents are presented by the exporter within a certain period of time.

• Open account

• Payment on delivery

• Bank guarantee

• Letter of credit

... is a payment method in which a business agrees to pay the seller for goods after the items are sold

• Prepaid order

• Consignment sale

• Direct sale

• Retail purchase

... is a payment method in which the bank of the exporter forwards documents to the bank of the importer and collects payment for the goods that have been shipped.

• Cash in advance

• Open account

• Documentary collection

• Letter of credit

In which situations is account opening financing commonly used?

• Account opening financing is commonly used in international trade to improve cash flow and provide competitive payment terms.

• For trade between parent companies and subsidiaries

• In domestic real estate transactions

• For personal loans to individuals

What can happen in open account transactions and consignment deliveries?

• Open account transactions can lead to credit risk for the seller, while consignment transactions can lead to inventory risk for the seller.

• Open account transactions guarantee payment for the seller.

• Risk of default or non-payment from the buyer.

• Open account transactions require advance payment from the buyer.

When are consignment contracts and open accounts typically used?

• Consignment contracts are used for retail; Open accounts are used for cash transactions.

• Consignment contracts are used for direct sales; Open accounts are used for one-time transactions.

• When the seller wants to test the market for new products or explore new markets.

• Consignment contracts are used for online sales; Open accounts are used for auctions.