Thank you for sharing!

Your article was successfully shared with the contacts you provided.

In 2011, cross-border trade reached a value of around US$18.2 trillion. Most of this activity—80 to 90 percent—was settled on open account terms, meaning that the buyer received the shipment before paying the seller. Open account trade has clear benefits for buyers of goods, but it puts sellers at some risk that the buyer might not pay. This can be especially troublesome when a company first begins selling to a new buyer in an unfamiliar region of the world. The traditional method for mitigating counterparty risk in such a situation is the letter of credit (L/C), a paper document issued by a bank that assures payment once the bank receives documentation that the shipment has fully met the contract terms.

Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now

Copyright © 2018 ALM Media Properties, LLC. All Rights Reserved.