BTEC Unit 5C - International payment methods

It relies on high levels of trust

• Cash in advance

• Open account

• Commercial payment systems

An open account is when goods are shipped and delivered by a supplier without receiving any payment

• International credit card

• Open account

• International bank transfer

International bank accounts can avoid changes in exchange rates affecting the business, which makes planning easier

• International bank transfers

• Consignment

• Open account

Other systems that can be used overseas, eg Apple Pay

• Cash in advance

• Commercial payment systems

• Letters of credit

Payment is usually made within 30, 60 or 90 days

• Open account

• Consignment

• International credit card

The bank of the importer agrees that they will pay the supplier as soon as the order has been completed and the terms and conditions of the letter of credit are met

• Letters of credit

• Commercial payment systems

• Cash in advance

Cash may be preferred by the supplier

• International bank transfer

• Cash in advance

• Consignment

The bank monitors the agreement between two different businesses and acts as a form of intermediary to make things easier

• Commercial payment systems

• Letters of credit

• International credit cards

High level of risk as distributor looks after the goods until they are sold

• Consignment

• Letters of credit

• Cash in advance

Cash may be used as part of the negotiations to get the best deal for the international business

• Buttons

• Cash in advance

• International credit card