International trade financing options include letters of credit and documentary collections from "summary" of International Financial Management, Abridged Edition by Jeff Madura
When engaging in international trade, companies have various options for financing transactions. Two common methods are letters of credit and documentary collections. Letters of credit involve a bank guaranteeing payment to the exporter upon receipt of certain documents, such as a bill of lading or invoice. This provides assurance to both the exporter and importer that the transaction will be completed successfully. On the other hand, documentary collections involve the exporter sending shipping documents to their bank, which then ...
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