UNIT 5. PAYMENT.

LESSON 2
What to Consider When Choosing an International Payment Method
1. Pros and Cons of ______________
Pros Cons
Buyer None Affects cash flow.
Risk of not receiving shipment or no
recourse for damaged goods.
Seller Payment is made before goods are Not a competitive advantage.
received.

2. Pros and Cons of ______________

Pros Cons
Buyer Enhanced cashflow because None
payment not due until goods are
received.
Seller Can increase sales as this payment No guarantee of payment.
option is advantageous to the buyer. No protection against cancelled order.

3. Pros and Cons of ______________

Pros Cons
Buyer Payment is made only after goods Relies on good faith that the seller will ship
are received and sold. the goods.
Seller Can reduce the costs of managing Delays payment and increases potential of
and storing inventory in a foreign not receiving payment.
country.

4. Pros and Cons of ______________

Pros Cons
Buyer Less costly than letters of credit. Payment is made before goods can be
Payment is made only once goods checked – relies on seller to ship goods as
are delivered. specified.
Seller Seller retains the title to goods until No guarantee of payment.
paid. No protection against cancellations.
Risk of having to pay for return transport if
the buyer cannot pay.
5. Pros and Cons of ______________
Pros
Buyer Payment made after goods are
received.
Terms can be customized.
Seller Low risk of default because the sale
is secured by the buyer's bank.
Terms can be customized.
Cons
Expensive.
Relies on seller to ship goods as specified.
Time consuming to manage.
Expiration dates.
Currency fluctuations can make the cost rise.
Strict documentary requirements to prove
what was contracted was provided.
Currenty fluctuations can make profit fall.