Which of the following financing methods entails the greatest risk for exporters?
A)Documentary collection
B)Advance payment
C)Letter of credit
D)Open account

Question

Quizplus · Accepted Answer

Open account is the financing method that entails the greatest risk for exporters because it involves the exporter shipping the goods and invoicing the buyer with the expectation of payment at a later date. This leaves the exporter vulnerable to non-payment by the buyer or payment delays, which could result in financial losses for the exporter. The other financing methods (documentary collection, advance payment, and letter of credit) offer more secure payment options for the exporter.

Which of the Following Financing Methods Entails the Greatest Risk