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Fruity McFruitFace is an exporter of fruit. Which of the following payment terms would be most advantageous for it?
Suggested Answer: D
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Exporters prefer advance payment - this puts the risk with the importer / buyer. There's a table of these four terms on p.36. An importer would prefer an open account arrangements. The other two options are in the middle and the risk is more equally split between the two parties.
12 comments · newest first
GI
Gilberto
2 months ago
D) advance payment seems risky but guarantees cash upfront.
TR
Tresa
2 months ago
I prefer A) open account. It builds trust with buyers.
LI
Lisha
2 months ago
I think C) documentary credits is the best choice. It ensures payment security.
RE
Ressie
2 months ago
I disagree, documentary collection is better for cash flow.
MI
Ming
3 months ago
I’m surprised advance payment is even an option!
AL
Alease
3 months ago
Documentary credits provide good security, right?
LI
Lisha
3 months ago
Open account seems risky, though.
KI
Kindra
3 months ago
I think advance payment is the safest option for exporters.
DE
Desirae
3 months ago
I think documentary collection could be a middle ground, but I’m not confident if it offers enough protection compared to documentary credits.
MI
Mitsue
3 months ago
Open account sounds familiar, but I can't recall if it really benefits the exporter. I feel like it might be risky without some sort of guarantee.
LE
Leota
4 months ago
I remember practicing a similar question where documentary credits seemed to provide more security for exporters. Maybe that's the best choice here?
TW
Twanna
4 months ago
I think advance payment might be the safest option for Fruity McFruitFace, but I'm not entirely sure if it's the most advantageous in the long run.