SBMG10013 Lecture Notes - Lecture 2: Negotiable Instrument, World Trade Organization, Roll Forming
8 Mar 2018
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Case study: ferro industries exporting challenge in a small firm. In my opinion, the right choice for the ferro industries would be letter of credit. It will reduce financial risk and ensure payment from yusuf . Letter of credit is a flexible banking instrument, issued on behalf of bank"s customer in order to secure a payment to seller. By using a letter of credit ferro industries was going to receive payment from yusuf within a few days. The other option which is full advance payment will be too risky for the buyer (yusuf), because of transactions risks in contracts such as: shipping risks or seller non compliance risk. Therefore, it was a right decision made by ferro industries do not ask for a full advance payment upfront. the third option which is the open account method is not the right choice for the ferro industries.
