Working Capital Management Question:
Explain what are the advantages of a LC to an exporter?
Answer:
Advantages of Letter of Credit to an Exporter:
1) Exporter is guaranteed payment upon presentation of specified documents.
2) It eliminates the risk of dealing with an unknown importer in a different country.
3) It becomes easier for the exporter to secure pre order financing.
4) Importer cannot refuse payment by raising a complaint about the goods.
1) Exporter is guaranteed payment upon presentation of specified documents.
2) It eliminates the risk of dealing with an unknown importer in a different country.
3) It becomes easier for the exporter to secure pre order financing.
4) Importer cannot refuse payment by raising a complaint about the goods.
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