An overview of various modes of payment

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An overview of various modes of payment

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The intrinsic safety of the instrument and the safety of the procedure: The commercial acceptability; the proximity between the rational seller and buyer and the cost. While some procedures are inexpensive, others are very expensive. If the transaction amount is small, sophisticated payment procedures may not be used. Appropriate techniques allow rapid repatriation of funds in the seller's country, while others may take much longer.

The different means of payment
The intrinsic safety of the instrument
Cash flow
Check
1. The circuit of a check
The bill (trafficking)
Promissory notes
Payment instruments specific to export
1. Documentary credit
2. The mechanism
3. Elements of DOC

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[...] The mechanism: Vendor buyer as there is a contract of sale between the two. The buyer provided instructions to his bank (issuing bank), which sends the letter of credit by SWIFT to the advising bank (the correspondent bank is the issuing bank in the seller's country). The advising bank and the issuing bank have an account with each other as well as a key computer system that allows them to exchange coded messages. When the vendor receives notification of the advising bank and the letter of credit (SWIFT), he must verify that the conditions specified in the letter of credit are consistent with the contract. [...]

[...] By definition, trafficking is an instrument of payment at the completion of a term, contrary to the check which is payable at sight. Legal framework: The convention that applies to trafficking is the Geneva Convention of 7 June 1930. It establishes the principle that the law that is applicable to trafficking at the international level is that of the country where the commitment to pay has been contracted (usually the law of the buyer). Guarantees offered by the bill: It must be "accepted", or signed. [...]

[...] Trafficking is an instrument of payment that is not recommended in international transactions except in the following cases: when the customer is known for small amounts Promissory notes This is a document through which the buyer agrees to pay a certain sum of money at a certain date. The RB performs the same functions as trafficking and differs only in form. It is an instrument of payment on term. Advantages and disadvantages: It has the same advantages and disadvantages of trafficking and the check. [...]

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