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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
Question 8
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. Clean payment B... show full transcript
Worked Solution & Example Answer: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
Step 1
Which form of payment has the lowest risk level for the exporter?
Answer
The form of payment that has the lowest risk level for the exporter is Payment in advance (Option D).
Explanation:
Payment in advance minimizes risk because the exporter receives payment before the goods are shipped. This ensures that the exporter is guaranteed payment, regardless of the buyer's actions after the transaction is initiated.
In contrast, other payment methods, such as a letter of credit, clean payment, or bill of exchange, may involve more risk for the exporter due to delays in payment, possible defaults, or complications arising after the shipment.