01.1. After a commercial purchase-sale agreement, what should be assessed first?

place in relation to the agreed payment method?

a) The method and place for the presentation of transport and customs documents.
b) The banks that must intervene in the operation.
c) The security offered by the medium, provided to the operation.
d) The solvency of the intervening banks.

1.2. In what relational context are simple payments appropriate?

a) In a context of free competition.

b) In a context of mutual trust.
c) In a context of legality.
d) In a market expansion context

1.3. In exportations considered risky, what type of payment methods is

the most suitable?

a) Simple payments.
b) Documentary payments.
c) Deferred payments.
d) Payments through financial instruments.

1.4. For low-risk operations, which means are most suitable?

a) The check, the promissory note, and the transfer or simple payment.
b) The documentary payment order and the documentary remittance.
c) The documentary credit.
d) The Bank Payment Obligation (BPO).

1.5. For medium-risk operations, which means are most appropriate?

a) The check, the promissory note, and the transfer or simple payment.
b) The documentary payment order and the documentary remittance.
c) The documentary credit.
d) The Bank Payment Obligation (BPO).

1.6. For high-risk operations, which means are most suitable?

a) The check, the promissory note, and the transfer

b) The documentary payment order and the documentary collection.
c) The documentary credit.
d) The confirming.

1.7. In a negotiation about the payment method to choose, what solution is

considered as the best?

a) The one that favors the exporter.

b) The one that favors the importer.
c) The one that benefits both (win-win).
d) The one that does not favor anyone.

1.8. The strength of an international brand in relation to small payments

suppliers, does it influence the choice of payment method?

a) No, the finances and the business vision of a company are independent.
b) No, the European regulation on payment instruments regulates this issue.
c) No, the payment method is not used in advertising.
d) Yes, it is decisive.

1.9. Is there any correlation between collection management costs and level of
security?

a) No, they are independent concepts.

b) No, the costs are fixed regardless of the safety of the means.
c) Yes, greater security, lower costs.
d) Yes, greater security means higher costs.

1.10. Are there other influencing factors in the decision regarding the payment method?
wake up?

a) The possibility of disposing of the goods before payment.

b) The possibility that the bank does not offer the chosen payment service.
c) The possibility that the means of payment is illegal.
d) The possibility of goods being held in customs.
[Link] with some concrete example if banks, in their offers
payment method commercials take advantage of the communication channel to offer
more services, and what services they are.

BNA offers different payment methods on its page in the Commerce sector.
Exterior, both for SMEs and large companies

1.2. Develop a framework in which the media is separated and classified.

payments that may or may not be related to corporate financing,
either bank financing.

Advance payment
Also known as prepaid, the very name of payment in advance
explains on its own. The buyer completes the full payment to the seller before
that the merchandise has been sent to the buyer.
The advance payment is an attractive option for sellers, but it involves a
high level of risk for buyers, as it produces a cash flow
unfavorable and does not guarantee the receipt of goods definitively or in
What conditions will these arrive?

This option is usually recommended for sellers who work with

novice buyers or buyers with low solvency indexes, as well as
in the case of products with a very high value.

Types of advance payments

Although there are many advance payment methods available, the most
Common methods include credit card payments and bank transfers.

Other means of advance payment include the following: - Payment with

debit card

Other names for advance payment

Payment in advance is also known in English as Cash in advance and as
Pre-payment.

Letter of credit
Theletter of creditit is one of the safest international payment methods, both
for the importer as well as for the exporter, since it involves the intermediation of
trusted financial institutions and a certain level of commitment between both
parts.

With a letter of credit, payment is made through the buyer's and seller's banks.
seller.

Once the conditions of the international sale have been confirmed, the
buyer gives instructions to their bank to pay the agreed amount between
both parties to the seller's bank.

The buyer's bank then sends a letter of credit to the seller's bank.
as proof that the buyer has legitimate and sufficient funds.
Payment is only made once the conditions agreed upon by both parties are fulfilled.
parts have been fulfilled and the goods have been shipped.

Other names for the letter of credit

The letter of credit is also known as documentary credit and in English as
Letter of Credit, LC, bankers Commercial Credit Documentary Credit.

Documentary remittance

The documentary collection is an international payment method in which both the bank
The buyer and the seller act as facilitators of the transaction.

The seller sends to their bank the documents required by the buyer, such as the
bill of lading, which is essential for the transfer of ownership of the
merchandise.

The seller's bank then sends these documents to the buyer's bank.
along with the payment instructions. The documents are only delivered to
change of payment, which is made immediately or on a specified date.

Basically, the seller transfers the responsibility of collecting payments to their

bank.

Other names for documentary collection

Documentary remittances are also known in English as Bills of
exchange as Documentary Collections.

Open account
Under the conditions of an open account, the goods are sent and
delivered before payment, as it is one of the means of payment
international more attractive for buyers, especially in terms of
cash flow.

On the other side of the spectrum, however, open accounts represent for the
high-risk sellers.
The seller sends the goods along with a set credit term. This
the period is normally 30, 60 or 90 days, during which the buyer must
proceed to make the full payment of the transaction.

Open accounts are usually recommended only when the seller is

dealing with high-reputation buyers, for buyers and sellers
that have a relationship of trust or for exports of a relatively value
under which minimizes the risk.

Simple Payment Order

Mandate that a person or company (ordering/unordered)importer) makes a bank

(sender) so that, either directly or through another bank (payer), puts to

disposition of a third party (beneficiary/exporter) a certain amount of
money. It is called direct when the intermediary agent is the same issuing entity.
in a different square, and indirect when theissuing bankused to make the payment,
the services of a different entity (correspondent bankNormally the
simple payment orders are transmitted between financial entities through the
systemSWIFT.

Documentary Payment Order

It is an order given by the importer to their bank to make a transfer.

in favor of the exporter only when the bank receives the supporting documentation
that the merchandise was shipped to the importing country (This means of
Payment increases the exporter’s confidence regarding the collection of their merchandise.

Documentary Collection

The exporter provides financial documents (bills of exchange) to a financial entity.

change) and/or commercial (invoices, packing lists, transport documents,
among others), in order for such documents to reach the buyer when the
the seller indicated it to the corresponding financial entity as a counter payment or
against acceptance of the financial documents.
Within documented collection, two types of situations are distinguished: 1) The
document against payment and the document against acceptance. 2) The intervention of one
or more banks does not constitute a guarantee for compliance with agreements or
agreements that have been stipulated between seller and buyer.

Documentary Credit

It is a contract in which a buyer abroad contacts a bank in the

external so that the bank can make the payment to the exporter through a
financial entity located in the country of residence of the seller.

The letter of credit is the most commonly used payment method in negotiations.
internationally, as it provides security to both parties.

1.6. Table 1.2 examines the efficiency of each payment method.

international. Look in the dictionary of the Royal Spanish Academy for the
The words 'efficiency' and 'effectiveness', compare both definitions and establish the
difference between both

Terms applied to international payment methods. Explain why,

In addition to being effective, a payment method must be efficient.

R.A.E: Efficiency-1.f. The ability to make use of someone or something to achieve

a determined effect.

[Link] to achieve desired results with the least possible

resources.

R.A.E: Effectiveness-f. Ability to achieve the desired or expected effect.

The payment methods that help better control your company's finances.

Essentially, payment methods are a set of tools that are used to

make the payment of economic operations between the different intermediaries,
avoiding the need to use physical money (coins and bills).

That is why payment methods are effective as they provide different

possibilities that individuals or companies have to pay for products or
services to export or import and are efficient as they provide the possibility that
they can carry out transactions between banks and acquire their products or
services providing security and are the main channel through which they can be transmitted
perturbations between the systems and national financial markets
international

1.1 From the essential concepts for choosing one payment method over another,
Which do you think should be considered first? Justify your answer.

When choosing a payment method, the first thing we must consider is the type of
security that we are going to offer since it is essential when carrying out a
export or import.

1.2. Explain aloud and in a reasoned manner why the level of security
of an international transaction is related to operating costs.

The decision on the most convenient payment method for a transaction

international trade will be based on trust between the parties
(security) and the bank fees that are generated for the parties. Greater
security, the higher the banking expenses will be.

1.3. What happens regarding the chosen payment method if we want to import
goods produced by a company of recognized international brand?
Can you refer to any specific case?

What happens when importing products from a recognized brand is that the
the most influential and prestigious company will be able to establish what means of payment
use it since it has a greater strength positioning.

● EXAMPLE
The company Más Por Menos, S.A. purchased in Panama more than 20,000
authentic sandals from the brand Havaianas. After acquiring them and without
authorization of the brand owner (Alpargatas, S.A.) introduced them into the
European Economic Area. Specifically, they were introduced at the customs of
Bilbao and, in customs deposit regime, and were stored in
Riofrío (Burgos).
Subsequently, Más Por Menos, S.A. offered and sold the sandals to the
British company Happy Sport Ltd., which sold them in the United Kingdom (before
of Brexit)
 Alpargatas, S.A. sued Más Por Menos, S.A. for trademark infringement.

1.4. If we urgently need an importing product, what will it be?

our position regarding the payment method to choose? Make a proposal for
examples.

The documentary credit is a payment order that the importer issues through
your financial entity to pay to the
exporter the amount of the operation, as long as said exporter complies,
strictly, with the condition of the credit itself (generally the delivery of
specific documentation).
A Spanish company (the ordering party) imports sugar cane from Jamaica for a
million euros. According to what was agreed with the Jamaican exporter
(beneficiary) addresses their bank (confirming bank), requesting them to open a credit
documentary (also known as letter of credit) for that amount.

The document or letter states that the issuing bank will pay that amount when
the exporter sends them specific documentation. The usual practice is the
bill of lading of the merchandise, plus any other documentation that
it is deemed appropriate (health certificates, appraisals, insurance, etc.).
We use the letter of credit as it is one of the international payment methods.
safer, both for the importer and for the exporter, since it implies
the intermediation of trusted financial institutions and a certain level of
commitment between both parties.

1.5 We are exporters and wish to enter a new market.

How does our position in this case influence the payment method?
elected? Give a brief and concise presentation.

In the event that we are exporters and wish to enter a

In the new market, we must take into account certain factors that can affect us.
help at the time of positioning ourselves in the market, such as the degree of
need, where this factor will help us know how required our
service or product for our consumers; the strategic factors us
they help to expand as a company and take advantage of all the possibilities
opportunities that may present themselves to us and the country's risk since
we must know the economic situation of the country we are in
we wish to export
1.6. Are there possibilities of exporting to countries in armed conflict or with
undemocratic governments? What minimum conditions would be required in
your case?

If it is possible to export to countries that are in war conflicts or with

non-democratic governments can pose different risks
when conducting the exportation, for example renegotiating contracts,
accumulate outstanding payments and face cost overruns due to issues of
logistics.
For example, in the case of Qatar, which is a non-democratic country...
what we need is
To export to Qatar, it is necessary to have a commercial agent.
local registered in the Chamber of Commerce and the Ministry of Industry and
Qatar's trade and, to whom the automatic licenses are issued.
import when a commercial operation is carried out. The import of
Goods in Qatar are regulated by the Qatar Custom Law (No. 40 of 2002), which
implement the regulation imposed by the GCC customs union (Countries
of the Gulf Cooperation Council.

1.7. What major drawback is inferred from the option of payment in advance?
From an import? Explain what types of companies it could affect.

The main drawback of the advance payment option of a

importation is that the buyer assumes the risk that the seller does not
fulfill their obligations to send the merchandise or that they do not
comply with the agreed specifications. This may affect
especially to small and medium-sized enterprises that do not have access to
great financial resources and may struggle to recover their
money if something goes wrong in the transaction.

1.8. What is the relationship between business financing and the payment method?
chosen? Provide an example that describes the situation.

The financing of companies is closely related to the

chosen payment method, since some payment methods offer more
security and protection against the risk of default than others. For example, if
a company decides to use a letter of credit to pay its supplier
abroad, the issuing bank of the letter of credit becomes a
payment guarantee, which reduces the risk for the seller and can facilitate the
obtaining financing by the buyer.
1.9. Our company is structured as a business group, with subsidiaries in the
exfra• iero. Explain what relationship this work scenario may have with the
chosen payment method in transactions.

If a company is structured as a business group with subsidiaries in the

foreigner, the choice of payment method can be key to management of the
 risk and cash flow optimization. For example, if a subsidiary in the
foreign needs financing for its operations, the parent company can
decide to use a bank guarantee issued by a local bank to
back a line of credit. This may allow the subsidiary to obtain
financing at lower interest rates and improving their financial position.

1.10. What role evaluates the availability of goods before or after

of the payment in relation to the chosen method? Can it be decisive?
Justify the answer.

The availability of goods before or after payment can be

determinant in the choice of payment method, since some methods of
payment requires the transfer of funds before they are sent
merchandise, while others allow payment after delivery. If
goods are essential for the operation of the business and its
immediate availability is critical, the buyer can opt for a means of
payment that guarantees the fast shipping of goods. On the other hand, if the
goods are not critical and the buyer wants to reduce the risk of receiving
defective or incorrect goods, you may choose a payment method
that allows the inspection of goods before payment