Question

Explain the different means of payment used in trade.​

Answer 1

Answer:

There are 5 types of payment methods available in international trade. These payment types are cash-in-advance, open account, documentary collections, documentary credits (letters of credit) and bank payment obligation.

Answer 2

Answer:

There are 5 types of payment methods available in international trade. These payment types are cash-in-advance, open account, documentary collections, documentary credits (letters of credit) and bank payment obligation.

• Cash-in-Advance: Cash in advance is a payment method in international trade in which an order is not processed until full payment is received by the supplier in advance.
• Open Account: Open account means that buyers pay the cost of the goods after goods have been shipped by the supplier.
• Documentary Collections: International trade procedure in which a bank in the importer’s country acts on behalf of an exporter for collecting and remitting payment for a shipment.
• Documentary Credits: Documentary credits, also known as letters of credit, are one of the payment methods in international trade.
• Bank Payment Obligation: Bank payment obligation is a new payment method in international trade.
• Bank payment obligation is a new payment method in international trade.Bank payment obligation (BPO) is an irrevocable undertaking given by an Obligor Bank (typically buyer’s bank) to a Recipient Bank (usually seller’s bank) to pay a specified amount on a agreed date under the condition of successful electronic matching of data according to an industry-wide set of rules adopted by ICC.

Explanation:

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