Payment Methods Final

Question 1

Define Letter of Credit

Answer 1

A guarantee to the beneficiary of payment once conditions are met

Question 2

Define Commercial Letter of Credit

Answer 2

Ensures a supplier is paid, used if supplier is unsure

Question 3

Define Documented Remittance

Answer 3

Payment of money transferred with documents

Question 4

Define Simple Remittance

Answer 4

Payment of money transferred without documents

Question 5

Define Simple Payment Order Transfer

Answer 5

Payment to exporter without documentation

Question 6

Define Bank and Personal Checks

Answer 6

Bank checks itself or financial entity, issued by individual

Question 7

Purpose of Letter of Credit

Answer 7

Importer doesn’t pay until contract done

Question 8

Who is involved in the Letter of Credit?

Answer 8

1. Issuing Bank
2. Intermediary Bank
3. Beneficiary
4. Payer

Question 9

What are the classifications of Letter of Credit?

Answer 9

1. Commitment issuing Bank
2. Commitment assuming Intermediary Bank
3. Payment deadline

Question 10

What is the commitments made by the issuing bank?

Answer 10

Revocable Line of Credit and Irrevocable Line of Credit

Question 11

What is the commitment made by the advising bank?

Answer 11

Confirmation and Non-Confirmation

Question 12

What are the banks obligations during a Non-Confirmation?

Answer 12

1. Verify
2. Notify
3. Receive
4. Pay

Question 13

What is the payment deadline classifications?

Answer 13

Deferred Payment + Payment in Sight

Question 14

What are the special letters?

Answer 14

Red Ink, Green Ink, Transfer, Revolving