GIVE A FEEDBACK OF A PARAGRAPH ABOUT THIS ARTICLE PLEASE RESPOND AS IF YOU WERE RESPONDING TO A CLASSMATE Provide a link where they can get more information Cash in advance Advantages Any collection problems are removed since payment is upfront The money can be used immediately, especially in the case of a wire transfer Escrow is mutually beneficial to both parties they are protected because the funds are held by a reputable third party Disadvantages Sometimes, payment may come in the form of a mailed check If delayed, this can defeat the purpose of cash in advance Credit cards can be subject to fraud As a result, the company should validate the form of payment as well as wait for the proper authorizations The buyer can be left with insecurities as to whether the goods services will be delivered performed Also, the buyer risks that the goods are not as described Exporters may lose clients if their payment methods are inflexible cash in advance is much more common in the U S than it is internationally Letters of credit (drafts) Advantages Can protect and benefit both the seller and the buyer terms are established by both parties, deeming this method versatile Flexible payment date they can be paid immediately or at a later date Secure option since letters of credit are issued by a bank, the institution serves as a form of accountability Also, these documents can be reviewed and confirmed by a U S bank if they were issued by a foreign bank this confirmation ensures legitimacy and limits economical political risk Disadvantages Banks charge fees for handling drafts and letters of credit these fees can be quite expensive Letters of credit, especially those that are irrevocable, can be problematic since banks only pay the exact amount specified If additional charges were to arise for transportation, insurance, etc , full payment may become complicated You may not be paid if you fail to abide by the document's stipulations Carefully read through the terms and decide in advance whether or not you can meet them amending a letter of credit may be difficult and in some cases, impossible SEE EXAMPLE ON HOW TO ANSWER BELOW Your post was incredibly helpful and to the point, so I enjoyed reading it Letters of Credit were not a topic I covered in my post, but reading about them in yours helped me understand their benefits and drawbacks much better An advantage you can add to Cash in Advance is that because there is no commercial bank involvement, it is less expensive and involves a direct buyer seller relationship Thank you for sharing such a great post Below I am linking a link that provides more information about Cash in Advances https www edc ca en article different payment terms html

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* GIVE A FEEDBACK OF A PARAGRAPH ABOUT THIS ARTICLE PLEASE RESPOND AS IF YOU WERE RESPONDING TO A CLASSMATE Provide a link where

* GIVE A FEEDBACK OF A PARAGRAPH ABOUT THIS ARTICLE

*PLEASE RESPOND AS IF YOU WERE RESPONDING TO A CLASSMATE

* Provide a link where they can get more information

Cash in advance

Advantages

Any collection problems are removed since payment is upfront.
The money can be used immediately, especially in the case of a wire transfer.
Escrow is mutually-beneficial to both parties; they are protected because the funds are held by a reputable third party.

Disadvantages

Sometimes, payment may come in the form of a mailed check. If delayed, this can defeat the purpose of cash in advance.
Credit cards can be subject to fraud. As a result, the company should validate the form of payment as well as wait for the proper authorizations.
The buyer can be left with insecurities as to whether the goods/services will be delivered/performed. Also, the buyer risks that the goods are not as described.
Exporters may lose clients if their payment methods are inflexible; cash in advance is much more common in the U.S. than it is internationally.

Letters of credit (drafts)

Advantages

Can protect and benefit both the seller and the buyer: terms are established by both parties, deeming this method versatile.
Flexible payment date: they can be paid immediately or at a later date.
Secure option: since letters of credit are issued by a bank, the institution serves as a form of accountability. Also, these documents can be reviewed and confirmed by a U.S. bank if they were issued by a foreign bank; this confirmation ensures legitimacy and limits economical/political risk.

Disadvantages

Banks charge fees for handling drafts and letters of credit; these fees can be quite expensive.
Letters of credit, especially those that are irrevocable, can be problematic since banks only pay the exact amount specified. If additional charges were to arise for transportation, insurance, etc., full payment may become complicated.
You may not be paid if you fail to abide by the document's stipulations. Carefully read through the terms and decide in advance whether or not you can meet them; amending a letter of credit may be difficult and in some cases, impossible.

SEE EXAMPLE ON HOW TO ANSWER BELOW

Your post was incredibly helpful and to the point, so I enjoyed reading it. Letters of Credit were not a topic I covered in my post, but reading about them in yours helped me understand their benefits and drawbacks much better. An advantage you can add to Cash in Advance is that because there is no commercial bank involvement, it is less expensive and involves a direct buyer-seller relationship. Thank you for sharing such a great post!

Below I am linking a link that provides more information about Cash in Advances.

https://www.edc.ca/en/article/different-payment-terms.html