Terms & Methods of payment in foreign trade

Terms & Methods of payment in foreign trade.
To begin speaking on this topic I’d like to start with the risks which are faced by both sides – exporters and importers – in an export transaction. This is because there is always the possibility that the other side may not fulfill the contract.
3. the importers might run into difficulties getting the foreign exchange to pay for the goods
4. the importers are not reliable & simply refuse to pay the agreed amount of money
And the risks for importers are:
1. the goods will be delayed & they will only receive them a long time after paying for them, because of:
• port congestion
• port strikes
2. delays in fulfillment of orders by exporters & difficult Customs clearance in the importing country can cause loss of business
3. the wrong goods might be send
But all these risks can be reduced with the help of the banks, which provide several services which give security to exporters and importers.
• the risk of buyer default or non-delivery by exporters is removed by the method of payment against shipping documents.
• exporters’ banks provide information about the financial reliability of their customers
• banks help arrange buyer credit or finance for the sellers (without this a lot of trade would not take place at all)
• the risks of financial lost because of a change in exchange rate can be avoided with the help of a bank, by buying the foreign exchange on the forward exchange market
So we must admit that the terms of payment are an integral part of contract in international trade. There are different methods of payment in foreign trade: in cash and on credit ( & in advance – according to Kotlyarov).
Now I’d like to speak about the methods of payment on credit, because most modern business is done on...

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