International modes of payment Workshop

Select the best answert to the following questions:

1. The least secure mode of payment for an importer is:

a. Open account
b. Cash-in-advance
c. Letter of credit

2. The least secure mode of payment for the exporter is:

a. Letter of credit
b. Cash-in-advance
c. Open account

3. The most secure mode of payment for the importer is:

a. Documentary collection
b. Open account
c. Cash-in-advance

4. The most secure mode of payment for the exporter is:

a. Documentary collection
b. Open account
c. Cash-in advance

Relate the definition on the left with the correct concept on the right

5. Mode of payment in which the exporter can avoid credit risk because a. Documentary collection
payment is received before the ownership of the godos is transferred.
6. One of the most secure modes of payment in which there is a b. Cash-in-advance
commitment by a bank on behalf of the buyer that payment will be
made to the exporter, provided that the terms and conditions stated in
the LC have been met, as verified through the presentation of all
required documents.
7. Transaction whereby the exporter entrusts the collection of a payment c. Letter of credit
to the remitting bank (exporter’s bank), which sends documents to a
collecting bank (importer’s bank), along with instructions for payment.

8. Transaction in which the goods are shipped and delivered before d. Forwarding
payment is due, which is usually in 30 to 90 days.

9. Transaction in which an exporter sales the invoices o bills to a third e. Open account
party
10. Transaction in which the exporter agrees with the importer the f. Factoring
currency of payment for the invoices
Complete with the best answer.

11. You are a colombian exporter and you are willing to do business with a Mexican Company. They offer you as
mode of payment a letter of credit. The best way to be secure with the letter of credit is:

a. Confirmed and revocable

b. Confirmed and irrevocable
c. Unconfirmed and irrevocable

12. In the same case explained before, if you own money to a colombian Company, ¿which letter of credit could
you use to pay the Company?

a. Irrevocable
b. Revocable
c. Transferable