Microsoft sells software to a French firm.In return,the French firm's bank,Credit Agricole,acknowledges it will pay Microsoft after the software is delivered to its client.Microsoft has most probably used
A)accounts receivable financing
B)factoring
C)forfaiting
D)letter of credit

Question

Quizplus · Accepted Answer

A letter of credit is a document issued by a bank that guarantees payment to the seller upon delivery of the goods or services. In this case, Credit Agricole, the French firm's bank, is acknowledging that it will pay Microsoft after the software is delivered, which suggests that it is using a letter of credit as a form of payment. Accounts receivable financing and factoring involve the sale of accounts receivable to a third party to obtain financing, while forfaiting involves the sale of trade receivables at a discount without recourse to the seller.

Microsoft Sells Software to a French Firm