Consider a bank that acknowledges that it will make payments on behalf of a computer importer after the computers are delivered to the importer. This reflects:

Question

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The described situation reflects a letter of credit, where the bank promises to make payments on behalf of the importer to the exporter once the goods are delivered and documents are provided as proof of shipment. Accounts receivable financing, forfaiting, and factoring all involve the sale or financing of receivables already owed to the company, whereas a letter of credit is used for trade transactions involving the shipment of goods.

Consider a Bank That Acknowledges That It Will Make Payments