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CIPS L5M3 Exam - Topic 3 Question 70 Discussion

Actual exam question for CIPS's L5M3 exam

Question #: 70
Topic #: 3

[All L5M3 Questions]

Fruity McFruitFace is an exporter of fruit. Which of the following payment terms would be most advantageous for it?

Aopen account

Bdocumentary collection

Cdocumentary credits

Dadvance payment

Show Suggested Answer

Suggested Answer: D

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.

by Chantay at Jul 15, 2026, 09:28 PM

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Kindra

3 days ago

I think advance payment is the safest option for exporters.

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Desirae

8 days ago

I think documentary collection could be a middle ground, but I’m not confident if it offers enough protection compared to documentary credits.

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Mitsue

13 days 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.

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Leota

18 days ago

I remember practicing a similar question where documentary credits seemed to provide more security for exporters. Maybe that's the best choice here?

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Twanna

23 days 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.

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