Unit 5 – International Business – Task 1 part 2
UNIT 5 – International Business – Task 1
part 2
, Unit 5 – International Business – Task 1 part 2
P2. Explain the types of finance available for
international business
International: In this part of my report, I will be explaining the types of finance
available for international business, I will be focusing on how these types of finance re
affecting my chosen companies, Tesla and BHP. The types of finances of which I am going to
talk about are, prepayment by the importer, letters of credit, export credits and bank loan.
Prepayment by the importer
An importer's prepayment is a payment made to the exporter ahead of time. The exporter
benefits more from this technique because it receives payments in advance. Every now and
again, companies must pay in advance to import items into another country, or for a foreign
company to import goods from the same country.
Advantages / Disadvantages:
Because payment is collected prior to the transfer of the products, the
importer's prepayment helps to avoid credit risk. Payment in advance, on
the other hand, is the least appealing choice for the buyer, as it causes
cash flow issues. Foreign customers
are also concerned that if payment is
made in advance, the items may not
be delivered. Other businesses may
be willing to offer better payment
methods, so exporters should be
aware. Payment in advance can be
made through the beneficiary bank
(importer) by creating terms and
conditions in a draught that will be
transferred to the issuing bank
(exporter) upon receipt of shipping
papers. The advance payment will be
UNIT 5 – International Business – Task 1
part 2
, Unit 5 – International Business – Task 1 part 2
P2. Explain the types of finance available for
international business
International: In this part of my report, I will be explaining the types of finance
available for international business, I will be focusing on how these types of finance re
affecting my chosen companies, Tesla and BHP. The types of finances of which I am going to
talk about are, prepayment by the importer, letters of credit, export credits and bank loan.
Prepayment by the importer
An importer's prepayment is a payment made to the exporter ahead of time. The exporter
benefits more from this technique because it receives payments in advance. Every now and
again, companies must pay in advance to import items into another country, or for a foreign
company to import goods from the same country.
Advantages / Disadvantages:
Because payment is collected prior to the transfer of the products, the
importer's prepayment helps to avoid credit risk. Payment in advance, on
the other hand, is the least appealing choice for the buyer, as it causes
cash flow issues. Foreign customers
are also concerned that if payment is
made in advance, the items may not
be delivered. Other businesses may
be willing to offer better payment
methods, so exporters should be
aware. Payment in advance can be
made through the beneficiary bank
(importer) by creating terms and
conditions in a draught that will be
transferred to the issuing bank
(exporter) upon receipt of shipping
papers. The advance payment will be
