However, disadvantages of this method includes the la-
bour process of it all very long and difficult.
How International Business can
be financed and make payments The last method that they could use when making pay- H ow In t ern at io n a l
ments is export credit guarantees. This is a type of insur- B us i n ess i s
ance policy that protects an exporter from non-payment by
International Businesses can be financed and payments
a customer. The main benefit of this is obviously it pro-
F i n an c ia l ly
can be made in a number of ways, these include cash in
advance, trade credit/open accounts, letters of credit, tecting a company from non-payment so it means they are Su pp or t ed
forfeiting, factoring and bills of lading. guaranteed money. A disadvantage could be that export-
ers find that this type of insurance is not available in all Task 2
Cash in Advance payment means that when a company situations which can affect any outstanding payments a
trades internationally, they only send orders out if they customer has.
have been paid previously. A benefit of this method would
be it completely eliminates the risk of not being paid as Legal Risks
they are ensured payment at the start. By also trading
The main issue that companies face when trading interna-
this way can mean that a company can get more involved
tionally is the fact that other countries have different busi-
with companies who trade better. However, a number of
ness cultures and languages. This increases the risk of
companies pay their supplier after 3 or 6 months, which
confusion and misinterpretation of how a company speaks
means that they can lose customers to competitors who
or comes across. This can affect how a company trades
allow them to pay later on.
with others internationally or if they even decide to trade
A Trade Credit or Open Account is a method that allows with each other.
the customer to pay over a number of days (usually 30,
Another legal risk is the location of a supplier, as this can
60 or 90 days). This can massively help other companies
affect what regulations and laws apply. If a company were
as they establish a better relationship with them as there
to not follow these rules, it could affect the overall profit of
is less pressure. It can also boost competitiveness when
their business and it could prevent them for trading inter-
trading internationally as other companies will want more
nationally in the future.
customers and will have to modify the amount of days
they allow the debt to be payable. However, an obvious Copyright can be big in some countries and can massively
risk with this method is that there is a risk of non- affect how a company trades as it affects how customers
payment as it is easy for the company to ignore their sup- view their brand. Whereas in other countries, copyright
plier. may not be as big of a law which can affect how they
trade in their customers country.
A common method when trading internationally is letters
of credit. This a letter that promises to a supplier that Linking into how a company makes payments, a supplier
they will pay them. This is an easy way for a company to would have to be careful about what currency their dealing
protect themselves. This type of method can mean that with and make sure they have correct non-payment poli-
there is a variety of payment, financing and risk mitiga- cies put in place.
tion options available.
bour process of it all very long and difficult.
How International Business can
be financed and make payments The last method that they could use when making pay- H ow In t ern at io n a l
ments is export credit guarantees. This is a type of insur- B us i n ess i s
ance policy that protects an exporter from non-payment by
International Businesses can be financed and payments
a customer. The main benefit of this is obviously it pro-
F i n an c ia l ly
can be made in a number of ways, these include cash in
advance, trade credit/open accounts, letters of credit, tecting a company from non-payment so it means they are Su pp or t ed
forfeiting, factoring and bills of lading. guaranteed money. A disadvantage could be that export-
ers find that this type of insurance is not available in all Task 2
Cash in Advance payment means that when a company situations which can affect any outstanding payments a
trades internationally, they only send orders out if they customer has.
have been paid previously. A benefit of this method would
be it completely eliminates the risk of not being paid as Legal Risks
they are ensured payment at the start. By also trading
The main issue that companies face when trading interna-
this way can mean that a company can get more involved
tionally is the fact that other countries have different busi-
with companies who trade better. However, a number of
ness cultures and languages. This increases the risk of
companies pay their supplier after 3 or 6 months, which
confusion and misinterpretation of how a company speaks
means that they can lose customers to competitors who
or comes across. This can affect how a company trades
allow them to pay later on.
with others internationally or if they even decide to trade
A Trade Credit or Open Account is a method that allows with each other.
the customer to pay over a number of days (usually 30,
Another legal risk is the location of a supplier, as this can
60 or 90 days). This can massively help other companies
affect what regulations and laws apply. If a company were
as they establish a better relationship with them as there
to not follow these rules, it could affect the overall profit of
is less pressure. It can also boost competitiveness when
their business and it could prevent them for trading inter-
trading internationally as other companies will want more
nationally in the future.
customers and will have to modify the amount of days
they allow the debt to be payable. However, an obvious Copyright can be big in some countries and can massively
risk with this method is that there is a risk of non- affect how a company trades as it affects how customers
payment as it is easy for the company to ignore their sup- view their brand. Whereas in other countries, copyright
plier. may not be as big of a law which can affect how they
trade in their customers country.
A common method when trading internationally is letters
of credit. This a letter that promises to a supplier that Linking into how a company makes payments, a supplier
they will pay them. This is an easy way for a company to would have to be careful about what currency their dealing
protect themselves. This type of method can mean that with and make sure they have correct non-payment poli-
there is a variety of payment, financing and risk mitiga- cies put in place.
tion options available.
