11th Class Business Studies International Trade Question Bank International Trade-II (Higher)

  • question_answer
    The process involved in securing payment for exports is very complicated. Do you agree? Explain your answer.


    Ans.     Yes, I agree. The process is very complicated and it can be explained by looking at the steps involved in securing payment for exports. Following steps are involved in securing payments for exports:
    1. Once the goods for export are shipped, the importer is informed about the shipment by the exporter. However, to claim the title of the goods, the importer is required to submit various documents, such as a copy of the Invoice, Bill of Lading, Packaging List, Insurance Policy, Certificate of Origin and Letter of Credit.
    2. These documents are sent by the exporter and provided by the exporter's bank only when the Bill of Exchange has been signed and accepted by the importer.
    3. The Bill of Exchange states the amount that the importer must pay to the bearer of the bill. Once the bill is received and accepted, the importer's bank is instructed by the importer to transfer money to the exporter's bank account.
    4. In case the exporter wants immediate payment from his or her bank even if the payment has not been released by the importer, then he or she can secure payment by signing a letter of indemnity. This letter acts as an undertaking that the exporter will indemnify the bank, along with the accrued interest, in case of non-payment by the importer.
    5. Last, when the exporter receives the payment from the bank, he or she obtains a Bank Certificate of Payment. This certificate states that the necessary documents along with the Bill of Exchange have been presented to the importer for payment and that the payment has been received in accordance with the Exchange Control Regulations.

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