Multinational Business Final Exam Pt 4

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payments in advance

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the safest method of payment from the exporters perspective

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factoring

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buy foreign accounts recievable at a discount from face value

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documentary collection

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whereby commercial banks serve as agents to facilitate the payment process

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draft

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a document drafted be the exporter that demands payment from the buyer at a specific time.

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bill of lading

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serves as both th etransportation between the exporter and the carrier and as a title for the goods in question

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sight draft

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requires payment of tiytle to goods at the point of transfer.

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time draft

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extends credit to the importer by requiring payment at some time in the future.

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trade acceptance

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an accepted time draft, it is legally enforcable and negociable deft instrument

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bankers acceptance

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a fee the importers bank also may accept a time draft, thereby adding its own obligation to pay the draft to the importers obligation

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without recourse

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when the buyer of the acceptance is stuck with the loss if the importer does not pay

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with recourse

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meaning the exporter will have to reimburse the buyer of the acceptance in the case of non payment by the importer

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letter of credit

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a document that is issued bY A bank and contain its promise to pay the exporter on recieving proof that the exporter has fulfilled all requirement specified in the documents

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advised letter of credit

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letter of credit in which the sellers bank advises the seller about the credit worthiness

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confirmed letter of credit

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the exporter can also request its bank to add its own guarantee of payment to the letter of credit

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irrevocable letter of credit

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a leeter of credit that cannot be altered without and the exporter

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revocable letter of credit

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a letter of credit than can be changed by the bank without th econsent of the buyer or the seller

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counter trade

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when a firm accepts something other than money as payment for its goods and services

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counter purchase

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when one firms sells its products to another firm at one point for compensation in th eothers firms product at another time.

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buy back

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when one firm sells capital to another firm and is compensated in the form of the output

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offset purchase

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form of countertrade in which a portion of the exported good is produced in th eimporting country

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clearinghouse accounts

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when the exporting firm incurs a counterpurchase obligation of an equivalent value

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switching arrangements

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whereby countertrade obligation are transfered from one firm to another

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transaction exposure

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when the excahnge rate chamges in the middle of a purchase

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translation exposure

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th eimpact on th efirms consolidated financil statement s of fluctuations in exchange rates that change the value of foriegn subsidiaries as measures in the parent company

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economic exposure

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the impact on the value of a firms operstions of unanticipated exchange rate changes

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centralized cash management

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system controlled by a parent corporation that cordinates worldwide cash flows of its subsudiaries and pools thier cash reserves