GMS 400 Lecture Notes - Lecture 8: Export Development Canada, Foreign Exchange Controls, Country Risk
27 Mar 2017
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Open account - the exporter provides credit for specified number of days (e. g. 30) after which payment for the goods must be made. Letter of credit (lc) - substituting the credit of the bank for that of the customer. A document from the importer"s bank guaranteeing payment by the bank, in a specified number of days if all conditions of the sales contract are met. Irrevocable lc: the foreign bank cannot withdraw the lc (this is the international standard) if the terms of the contract are followed. Confirmed lc - confirmed by exporter"s bank (the exporter"s bank agrees to pay should the foreign bank to do so) Maybe a new government policy or alteration of exchange controls in the buying countr y. Foreign bank may run short of hard currency. Provides financing or loan guarantees for major capital projects in foreign markets. Provides buyer financing for capital equipment and services: lends money to the importer of.
