ДЕНИСЮК НАТАЛІЇ, ОА -404

1.
Wholesale discount; payment on order; unreliable; discount on prepayment; payment on
delivery; payment; payment on receipt of the invoice; balance; debt; interest; rent charge;
purchase by installments; pay; tenant; be guilty; discount on cash payment; first payment; get
rid (of); open account conditions; lease agreement; person issuing the bill; accepting the bill;
date of payment; payment on receipt; transport documents; receiving bank; endorse.
2. 1C) 2B) 3A) 4B) 5A)
3.
1) COD - Cash On Delivery. Payment has not yet been made for the goods being
delivered. Once delivered, payment is made. The sender assumes risks in this scenario. The
goods might be damaged in transit and/or the recipient may decide not to pay.
CWO - Cash with order. This option can work well with customers for whom credit is
not being extended. In other words, there is no "Net X" involved. The customer will need to
supply payment in full before any goods will be produced and shipped. Payment must first
be received and verified with the bank.

2) Cash-in-Advance payment for domestic trade is most favorable for the seller.
With cash-in-advance payment terms, an exporter can avoid credit risk because
payment is received before the ownership of the goods is transferred. For international sales,
wire transfers and credit cards are the most commonly used cash-in-advance options
available to exporters. With the advancement of the Internet, escrow services are becoming
another cash-in-advance option for small export transactions. However, requiring payment in
advance is the least attractive option for the buyer, because it creates unfavorable cash flow.
Foreign buyers are also concerned that the goods may not be sent if payment is made in
advance. Thus, exporters who insist on this payment method as their sole manner of doing
business may lose to competitors who offer more attractive payment terms.

3) The D/A transaction utilizes a term or time draft. In this case, the documents required
to take possession of the goods are released by the clearing bank only after the buyer accepts
a time draft drawn upon him. In essence, this is a deferred payment or credit arrangement.
The buyer’s assent is referred to as a trade acceptance. D/A terms are usually after sight, for
instance “at 90 days’ sight”, or after a specific date, such as “at 150 days’ bill of lading
date.”
As with open account terms, there are some inherent risks (disadvantages) in selling on
D/A:
1. The importer can refuse to accept the goods for any reason, even if they are in good
condition.
2. There is a slight risk that the importer will receive their goods without the original
shipping documents (such as a bill of landing, commercial invoice, or certificate of origin)
3. The buyer can default on the payment of a trade acceptance. Unless it has been guaranteed
by the clearing bank, the seller will need to institute collection procedures and/or legal
action.
Despite the risks listed above, utilizing D/A transactions have a number of advantages
for the seller: 1. The bill of exchange facilitates the granting of trade credit to a buyer.
2. It can provide the seller access to financing.
3. The bill of exchange is formal, documentary evidence, acceptable in most courts,
confirming that the demand for payment (or acceptance) has been made to the buyer.
4. The seller retains control over the goods until the buyer either pays draft as a legal time &
terms draft.
5. Bills of exchange can be bought and sold at a reduced rate through discounting.