TRƯỜNG ĐẠI HỌC THƯƠNG MẠI

HỌC KỲ II NĂM HỌC 2020 – 2021

(Phần dành cho sinh viên/ học viên)
Bài thi học phần: Tiếng Anh Thương mại 1.4 Số báo danh: 28
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Mã số đề thi: 04…………………………. Lớp: 2141ENPR5111…………………………
………… Họ và tên: Nguyễn Thị Thoa
Ngày thi: 11/6/2021 Số trang: 5 ……………………………………..
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Điểm kết luận:

GV chấm thi 1: …….………………………......

GV chấm thi 2: …….………………………......

Câu 1 (5 điểm):

Write an essay to answer the questions “On what basis do the business partners choose
the method of payment? What are the advantages and disadvantages of the methods of
payment: open account, advance payment, bills for collection?” Give specific examples to
illustrate your point of view.

Câu 2 (5 điểm):

Situation:

As an exporter, decide what methods of payment (Open account / Advance payment /

Bills for collection) you would require from these customers. Give the reasons for your
choice and how do you protect yourself against the risk of non-payment when giving
credit to customers?

1. The buyer is a well-known company in a large country in western Europe. This is the
first order but you hope the buyer will become a regular customer.

Họ tên SV/HV: Nguyễn Thị Thoa………………………….………… - Mã LHP: 2141ENPR5111Trang

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2. The buyer is in a country where currency exchange is controlled by the government.
Requests for foreign currency payments must be justified by supporting documents.

3. The buyer is a new customer in a country with a fragile economy and a poor credit
rating

Bài làm

Câu 1:

To succeed in today’s global marketplace and win sales against foreign competitors,
exporters must offer their customers attractive sales terms supported by the appropriate
payment methods. Because receiving payment in whole and on time is the ultimate goal of
each export sale, an appropriate payment method must be carefully selected to minimize
payment risk while also satisfying the buyer's expectations. For importers, the bases for
selecting the payment method are that the most cost is appropriate, the items arrive on
time, and there is no chance of shortages or undelivered goods. The methods of payment
the business partners can consider are open account, advance account and bill for
collection. Depend on the different needs, each company will select the suitable method to
bring back profit for the company.

The different methods of payment have different advantages and disadvantages.

Firstly, we talk about open payment, what is definition of open payment? An open
account transaction is one in which the items are transported and delivered before
payment is due, which is commonly in 30, 60, or 90 days in international sales. It has a lot
of advantages to both buyers and sellers such as This is a very low-risk option for your
customer, since they receive the goods before paying for them; using an open account can
also help the sellers land a deal, they should check the buyer's credit before agreeing to it
and offering open account terms will make the businesses more competitive in most
marketplaces, increasing recurring business and helping them grow market share and
client loyalty. Inspire of having many advantages, the method of payment has restrictions.
The biggest risk with open account we can see obviously is getting paid late, or not
getting paid at all; in addition to the loss from the unpaid debt, you may suffer charges

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trying to collect on the debt if the customer does not pay. While this payment term
involves the fewest restrictions and the lowest cost for the buyer, it also presents the seller
with the highest degree of payment risk and is employed only between a buyer and a
seller who have a long-term relationship involving a great level of mutual trust. For
example, Vinamilk, the largest dairy company in Vietnam, Vinamilk has used this
method to a number of US companies, they have attracted a lot of loyal companies;
however, they also have to bear significant costs due to companies paying late or not
paying at all.

Secondly, advance payment is pre-payment method in which, an importer the payment

for the items to be imported in advance prior to the shipment of goods. We can say that
this payment is least risky form of payment for the seller because they can get money
right after the sale. Cash in advance provides the working capital the exporters need to
process the order; there’s no strain on cash flow. On other hand, advance payment creates
a lot of risk factors for the importers that from the buyer's perspective, the payment is the
least appealing and competitive option because paying cash in advance is the riskiest
method to do business, buyers give seller money up front with no guarantee the seller
will deliver the products. This method of payment can also keep a buyer's money locked
up as they wait for delivery. As a result, few international customers will accept to pay in
cash. For example, to some companies in Thailand, Vinamilk required them to pay in
advance because they wanted to get money at the time the sale, but many companies do
not accept to pay in advance since they avoid the situation that Vinamilk do not shipping
products to them.

Finally, bill for collection is an important bank payment method under, which the sale
transaction is settled by the bank through an exchange of documents. Bill for collections
are less risky than open accounts because they are conducted through banks, with the
bank serving as seller’s agent. Moreover, they are also less expensive, so they may be a
more competitive option. But the bank is not obligated to pay if customer refuses or is
unable to pay once the products arrive. Thus, bill for collections should be utilized with
extreme caution if the market is politically risky, the buyer will not pay. For example,

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Vinamilk has applied this payment and they saw that bill for collection helps the company
save a lot of money and has less risky than open account but sometimes, if business
partners refuse to pay, the bank also do not solve the problems.

It will take some consideration and study to decide which payment option to employ,
exporters will greatly reduce chance of non-payment if they conduct proper due diligence
on their consumer and market.

Câu 2:

1. The buyer is a well-known company in a large country in Western Europe. This is the
first order but you hope the buyer will become a regular customer.

As an exporter, I allow the buyer to pay by open account payment because i

notice that the company is a well-known company in large country in Western Europe,
which suggests that their reputation is fairly good and I can trust they would pay on
time. I also want to demonstrate mutual trust in the organization and want to work
with them on a long-term basis in the future. Inspire of my trust, I cannot guarantee
that risks will happened to my company. So, to protect yourself against the risk of
non-payment when giving credit to customers, I will offer competitive open account
terms while significantly lowering the risk of nonpayment through the use of one or
more appropriate trade finance approaches and when offering open account terms, my
company can seek extra protection using export credit insurance.

2. The buyer is in a country where currency exchange is controlled by the government.

Requests for foreign currency payments must be justified by supporting documents.

In this case, I think I will choose bill for collection for my business partner. As
requested, the buyer wants my company to justify by supporting documents when
paying foreign currency. Thus, bill for collection payment is appropriate because the
sale transaction is settled by the bank through an exchange of documents. To avoid not
paying from the buyer, I need to make certain that the market is not politically risky.

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3. The buyer is a new customer in a country with a fragile economy and a poor credit
rating

To make sure the customer will pay money on time, my company will use
advance payment for the company because the buyer is in a country which have a
fragile economy and a poor credit rating, it is extremely dangerous for my company to
allow them to pay by other method payments, a poor credit rating shows that the
company’s paying ability is low and it can create a lot of payment risks for my
company. So, I have to make sure my company does not bear any costs from paying
late or not paying of this company.

---Hết---

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