An export company based in Sydney sells Australian-made art to the Asian market, Which form of payment has the lowest risk level for the exporter? A - HSC - SSCE Business Studies - Question 8 - 2023 - Paper 1

To determine which payment option has the lowest risk for an exporter, we need to analyze each option:

1. Clean payment: This involves exporters sending goods before receiving payment. This method carries high risk because if the buyer fails to pay, the exporter has no recourse.

2. Letter of credit: This is issued by a bank to provide a guarantee for payment to the exporter once specific conditions are met. It reduces the risk significantly for exporters, as they are assured of receiving their payment as long as they comply with the terms.

3. Bill of exchange: This document requires payment at a specified time. While it provides some assurance, it can still involve risks related to non-payment or delays.

4. Payment in advance: This is the option with the lowest risk for the exporter, as they receive payment before the goods are shipped, assuring that there are no outstanding payments once the transaction is completed.

Therefore, the option that offers the lowest risk for the exporter is D. Payment in advance.