Payment Methods of International Transactions/Summary

Summary
This discussion has focused on how to identify a variety of payment methods available to a risk manager. Businesses who sell in the 21st century global market appreciate that secured transactions are not only way transact business when selling internationally if they want to be both competitive and grow their business. A significant responsibility of a credit manager is to understand the use of the various payment terms in a competitive business environment. However, an international manager is not the only person who needs to learn to describe and apply the various payment methods that will apply to buyers. Senior financial management of the seller as well as the “business” people – marketing, operations – are well-advised to seek information as to payment decisions with buyers so that they are able to evaluate payment terms. Payment terms are an important component of the relationship with buyers. A pro-active international manager involves other business units and individuals, such as those in sale management, not only in the process of “why” certain credit terms are determined for a buyer, but also “how” they are determined.

Even though in most organizations the credit risk group has the responsibility of establishing and determining payment terms of customers, good business judgment in an organization should be exercised by bringing in internal customers to the decision process since they have stakes in the relationship with existing or potential buyers.