International Payments | English for finance

International Payments

Match the type of payment with the description, and choose the best word from each pair in red type

Four methods of payment for imports/exports: Advance payment, bill of exchange, documentary credit (or letter of credit), open account.

a. _________________

The exporter sends the goods and documents/papers (1) to the foreign buyer. The buyer pays the invoice when the goods arrive, or within a certain period from the invoice date. This can be risky, as the exporter trusts the buyer to respect/honour (2) the original sales contract.

b. _________________

A foreign bank issues a promise / and undertaking (3) to the exporter (through a bank in the exporter’s country) to pay for the goods as long as the exporter matches/complies (4) with the conditions of the contract. This is a much safer form of payment for the exporter. To be even safer, the exporter can arrange for the bank in his/her country to act as/be (5) “confirming bank”, which means that the bank in the exporter’s country is responsible for the transaction.

c. ________________

A legally-binding/legally-holding (6) agreement that the importer will, on acceptance of the bill, pay the exporter for the goods. The risks are that the importer does not accept the bill even though the goods have arrived, or doesn’t pay/ dishonours (7) an accepted bill when it matures/is time to pay (8).

      d. ________________

      The exporter does not send/dispatch (9) the goods until payment has been received from the importer. There is no risk for the exporter – all the risk is taken by/with (10) the importer.