# Effects of Late or Non-payments/Impact of Nonpayment

 Unit 3.3- Effects of Late or Non-payments Go to Unit 3.1 | Unit 3.2 | Unit 3.3 | Unit 3.4 | Unit 3.5 Return to International Finance Module 3: Commerical Risk

## Impact of Nonpayment

What happens if the credit information that is available indicates the buyer is credit-worthy but the buyer still defaults? The impact of nonpayment or true cost of credit in international business is almost invariably greater than it appears. There are four types of impacts associated with nonpayment, over and beyond the impact to sales:

Buyer XZY is given a line of credit of $100,000 and expected to pay in 30 days. On the 25th day, the buyer asks the seller to approve another order for$100,000, meaning that on the 25th of the month, the credit extended is $200,000. The seller agrees because the buyer commits to make payment for the first$100,000 on the 30th of the month. However, the buyer reneges on this promise so that the seller is owed more than the original agreed-upon credit line.