...3 TRADE FINANCE GUIDE Chapter 1 Methods of Payment in International Trade T o succeed in today’s global marketplace and win sales against foreign competitors, exporters must offer their customers attractive sales terms supported by appropriate payment methods. Because getting paid in full and on time is the ultimate goal for each export sale, an appropriate payment method must be chosen carefully to minimize the payment risk while also accommodating the needs of the buyer. As shown in figure 1.1, there are four primary methods of payment for international transactions. During or before contract negotiations, you should consider which method in the figure is mutually desirable for both you and your customer. Figure 1.1. Payment Risk Diagram Key Points • To succeed in today’s global marketplace and win sales against International trade presents a spectrum of risk, which causes uncertainty over the timing of payments between the exporter (seller) and importer (foreign buyer). • For exporters, any sale is a gift until payment is received. • T herefore, exporters want to receive payment as soon as possible, preferably as soon as an order is placed or before the goods are sent to the importer. • For importers, any payment is a donation until the goods are received. • Therefore, importers want to receive the goods as soon as possible but to delay payment as long as possible, preferably until after the goods are resold to generate enough income to pay the exporter. 4 Cash-in-Advance ...
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...Assignment On: International Trade Payment and Finance with Special Reference to Bangladesh Course Title: International Business Course Code- BUS 510 Prepared To: Mr. Ahsan Habib Faculty of BRAC Business School. Prepared By: Md. Mahabubur Rahaman Program- MBA ID- 10364038 Section - 1 Submission Date- 24th December, 2011. [pic] Introduction The international trade activities are grown day by day. This trend is attributable to the increased globalization of the world economies and the availability of trade payment and finance from the international banking community. Although banks also finance domestic trade, their role in financing international trade and payment system is more critical due to the additional complications involved. First, the exporter might question the importer’s ability to make payment. Second, even if the importer is creditworthy, the government might impose exchange controls that prevent payment to the exporter. Third, the importer might not trust the exporter to ship the goods ordered. Fourth, even if the exporter does ship the goods, trade barriers or time lags in international transportation might delay arrival time. Financial managers must recognize methods that they can use to make payment and finance international trade so that they can conduct exporting or importing in a manner that maximizes...
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...Sources of Business Finance ----------------------- |Finance method |Explanation |Benefits |Drawbacks | |Owner’s Funds |Business owners often have to use their|Savings are a good source of finance |There is always risk involved; the owner could | | |own personal savings to start a |because no interest has to be paid |lose his funds if the business is not successful. | | |business, particularly if they are a |whilst the money is being used. | | | |new sole trader. | |The owner may not have sufficient funds to start | | | |Business remains in full control of the|up the business. | | |Banks may no be willing to take the |owner. | | | |risk and invest in them. | | | |Retained Profits |This is the money retained in the |Using retained...
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...concerning reproduction. If these women, exercised their human rights and made the decision for themselves, it would raise the average per-capita income because the money earned would be supporting fewer people. Women who have fewer children are able to gainfully contribute to the workforce; this it would raise the income of their family unit. Poverty can also be reduced with aid and guidance from a reputable governmental system. The more people that work outside of the home will increase the available funds by payment of income and property taxes. A well-structured government would enact these taxes in such a way that would be affordable to all. Monies received from these taxes would pay for education, job training, food banks, health care resources, and housing. Poverty can also be reduced in creative ways such as international trade of goods native to their particular area. A Western country that may be a source of aid and knowledge would facilitate this trade. Utilizing natural resources to their full potential to benefit those who live there can also reduce...
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...A New House Readiness Susan Whitebird XECO/ 212 April 5, 2012 Linda Beach The decision to buy a house or not is one of the biggest life changing decisions you can make. If there is more than one person involved in this decision to purchase a house they will experience the first principle of economics, people face trade-offs. What means more the price of the house or the location of it? I think that the location means more than the price, but you have to keep the price in mind when you are looking. How far are they willing to travel to work to get the home they want? When my husband and I bought our house I was willing to drive 50 miles a day round trip to and from work to get the home my husband and I fell in love with. The second principle of economics is also important when it comes to purchasing a home. The cost of something is what you give up to get it. We were paying $450.00 a month in rent and now we are paying $610.00 a month for our house payment. We had to pay off some of our other loans and we have to watch what we spend our money on to make up the difference of the rent and what our house payment is, but it is worth it. Most people will consider the fourth principle of economics when they buy their home. The fourth principle is people respond to incentives. When you own your own home it will provide you with a tax break when you file your taxes. We bought our house when there was a tax incentive of a 10% of the purchase price. This tax incentive...
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...September, 3 2013 Buying a house is a large financial decision. Taking on that kind of debt can be a large burden or it could be a blessing. When you buy a house you trade a payment for stability and ownership or,you over spend. Your decision has to based on what you can afford and what the economy is doing around you. When my wife and I bought our house 4 years ago we were able to deduct the interest from our payments on our yearly taxes, allowing for a larger refund and helping us create more equity in our home. It was always a pleasure to get that check and think about what project we wanted to do next. But that has all changed because of the lift on the Bush tax cuts. When this happened it heightened the amount of money that is taken from our checks, taken the child tax credit away from us, and we cannot deduct our yearly interest paid. There are people that look to that refund based on what they have to pay in or just to buy necessities. My in-laws are traditional blue collar people. They make just enough to live well but also just enough to have to pay in to the government every year, rather than get a check back. So they are continually looking for new ways to find deductions on their taxes. With the tax deduction on mortgage interest paid gone, there is one less way to help them lower their payment to the government. For some people loosing this deduction could be a sign that the economy is moving away from helping people to own a home, making the decision the...
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...1. Introduction Recent research suggests that people who are compensated with an hourly wage make different decisions about using their time than do people whose pay is not as explicitly time-dependent (DeVoe & Pfeffer, 2007a, 2007b). The argument is that when people paid by the hour think about their time in terms of money, they are more likely to adopt an economic evaluation lens when making decisions about spending time and, in particular, will devalue uncompensated activities. The fact that under conditions of hourly payment people primarily use economic criteria for decisions about time use stands in contrast to much research showing that people generally make decisions about money and time differently (e.g., LeClerc, Schmitt, & Dube, 1995; Okada & Hoch, 2004; Soman, 2001). As one example of this phenomenon, Evans, Kunda, and Barley (2004) found that technical contractors, who sold their services by the hour, became economic evaluators of time. With money and opportunity costs salient, contractors devalued non-compensated time and acted as if they were constrained in their decisions about taking time off from work. DeVoe and Pfeffer (2007a) found that people in a nationally representative sample who were paid by the hour (compared to those not paid by the hour) or those in an experimental setting who were randomly assigned to calculate their approximate hourly wage rate (compared to those who did not) weighed the economic returns of spending time more strongly...
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...Starbucks Video Case 1. There are many benefits of mobile payment systems in terms of situational influences and level of involvement. By substantially reducing the amount of time and effort required to pay for the goods, the system can increase the rate at which customers are served, shortening lines and reducing the number of employee hours spent running cards and making change. Mobile payment systems make the physical presence of cash and credit cards unnecessary, allowing for more impulse purchases and reducing the likelihood that an otherwise loyal customer will pass up the opportunity to make a purchase just because they forgot their wallet. These systems also reduce the cost of fees imposed by credit card companies on consumers and merchants, by reducing the number of small transactions (where the fee required to use a card may exceed the actual price of the item). 2. With their purchase of Evolution Fresh, Starbucks is addressing increased consumer demand for products that are viewed as being part of a “healthier lifestyle” (text). Consumers are looking for fresher, all-natural foods and are willing to pay a higher price for them, satisfying their esteem needs by getting a product that is viewed as superior to basic fast food. Also, by tying itself to the makers of a premium product, Starbucks is solidifying consumers’ perception of it as a retailer of premium food and juice, allowing it to move beyond its original coffee-centered business. 3. Starbucks...
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...contract. After negotiation both parties decided that the contract can be released only if Port Cricket Club pays $6,000 to Ben & Bill Reticulation Pty Ltd. The main issue that Bill and Ben Reticulation Pty Ltd face is that the amount of $6,000 they received from Port Cricket club is to be taxed or not? Whether the amount they received is assessable income or not? Identify the relevant law i.e. relevant legislation provision and cases Taxpayer usually receive compensation payments when they make any commercial or any other kinds of loses. The compensation payments are usually determined by what the payments are received for. There are two types of compensation payments, income nature and capital nature. Income nature is the payment received by a taxpayer to compensate their loss of amount or item that would have been received in revenue accounts. Whereas, capital nature are the payments received by a taxpayer to compensate their loss or destruction of their capital asset. The compensation payments received for the cancellation of trading contracts are assessable income. Under the section 6-5 of ITAA 97, it is clearly stated that ‘Your assessable income includes income according to ordinary concepts, which is called ordinary income’ Apply the law to the problem When applying the law to...
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...architectural firm. * The architectural firm starts to lose profits. Richard firmly believes this is due to his involvement with Oil Company. * Richard and his partner agree to use earnings of the architectural firm to pay back the creditors of Oil Company. They both believe this will improve their business profits. * The IRS is disallowing these deductions claiming they are neither ordinary nor necessary. Issues: According to Sec 162(a), There shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including a reasonable allowance for salaries or other compensation for personal services actually rendered, traveling expenses (including amounts expended for meals and lodging other than amounts which are lavish or extravagant under the circumstances) while away from home in the pursuit of a trade or business, and rentals or other...
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...accompanied by efficiency. One of the major challenges encountered by the business community is means of payments especially if the operations involve international trade. For a business person with clients abroad or making use of inputs from oversea countries, the means of payment is really a pinching issue. However, in contemporary world which is characterized by rapid improvement of the standards of living, technology has identified this problem. Experts in this field have invented various means of payment available to the business community to make their commercial activities easier for rapid economic growth and prosperity of human kind. The consumers have also not been left out, since they are the targeted group by the manufacturers of different commodities. These payment methods make use of the internet and therefore can be used to reach all the parts of the world. They have been termed as online payment and they include the following:- (i) Masterpass It’s also called Masterpass wallet. It contains customer’s information about payment and shipping address. This is done in a very secure and convenient place. This facilitates purchase of commodities everywhere where this card is accepted. (ii) Paypal This means of payment has millions of active account s all over the world. Its major service include online payment and e-wallet. It contains stored paypal payment information as well as Paypal Express Checkout. It therefore ensures that customers with email address get...
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... | |DIRECTIONS: Follow each step below. The charts on the next pages will help you stay organized. You must complete all the required information on pages 2-3. | |Your final work must be TYPED NEATLY. | | | |You will receive a “consumer profile” showing 1) your annual net income, 2) description of your lifestyle, 3) the amount of down payment you will put down, 4) | |the time period you will have to pay off the loan, and 5) the APR for the loan you will take out. Using that information, make a list of your NEEDS and WANTS | |for a new car using the table on page 2. You may want to add some details to your consumer’s profile. | |Calculate how much money you can spend on car expenses (loan + gas + insurance +...
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...viewed as occurring in the ordinary course of the taxpayer’s business or income earning activities. To determine whether the proceeds are income, as distinct from a capital receipt, regard should be had to all of the facts of the particular case, since no one fact is likely to be conclusive. In particular, the following facts need to be considered: 1. The business or profession of the taxpayer. If his or her business or profession is such that such disposals are reasonably incidental to the conduct of such a business or profession, the lump sum is more likely to be viewed as income; the periodicity, regularity and repetition of such contracts. If contracts for the disposal of copyright are frequently entered into, it is more likely that the payment is income and not the mere realisation of a capital asset; and the existence of a profit motive. If the taxpayer’s substantial or dominant purpose in disposing of the copyright was to derive a profit, the receipt is more likely to be income. However, if the taxpayer is carrying on a business, and the receipt is extraordinary when judged in relation to the ordinary course of that business, the receipt may still be income if the principle in Federal Commissioner of Taxation v. Myer Emporium Ltd 87 ATC 4363 applies. 2. The receipt may constitute income even though it arises from an isolated business transaction, if the taxpayer is already conducting a business and the taxpayer’s intention or purpose in entering the transaction was to make a...
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...There are different benefits to commerce of acquiring shareholders, and other entities that shield their members in regard to protection from personal liability. The primary benefit is it allows the shareholders, in the course of joint agreement, this will allow themselves to be exempt from liability, whereas the general partners bear the main responsibility for their actions. This will force the top executives and other members involved to be responsible for their actions. Corporations are formed among other things, to shield shareholders from personal liability for the corporation activities. Creditors look at the assets of the corporation for payment, but may not look at the shareholders personal assets for payments. The shareholders can be millionaires and creditors will not make them pay the corporations debts. The other benefit is that the shareholders who decide to invest, but do not want to become actively involved in the organization would not want to become involved in taking responsibility for the shareholders and others in the organization who are actively involved. Because of this benefit, the shareholders that wish to invest and do not want to become actively invested will not be held responsible for the action of others, in the organization. If the benefit to commerce with shareholders not being personally liable were not enforced, investors would be concerned about their own assets, and would not want to invest in large companies, where large dollar...
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...been affected by many factors such as environment, trade and science. There is no doubt that inventions or creations of something new have had a significant influence in the historical process of human beings. Creativity is the source of innovation, and all the inventions, science and technology which promoted the advancement of human civilization, are inspired by creative ideas. Without creativity, there would be no development, and the world might be the same as hundred years ago. “Creativity, understood as fruitful originality, not mere novelty, is omnipresent in human experience, from the brilliant artistic works, inventions and discoveries that change the course of one life or many to the everyday efforts of problem solving seen in verbal or mechanical wit” (Caramenico & Goodman, 2013). On the other hand, commercial and trade also play a substantial role in the development of society. Moreover, the method of payment, which is a crucial part of business, has had a tremendous impact on individual’s lives. This essay will analyse the creativity of payments in two aspects which are motivation and imagination by examing the development of human society. This essay will also provide two real world examples to give a critical analysis of how creativity is applied in payments. The methods of payments are everywhere in people’s lives, such as shopping or transfer accounts. According to Babbush & Charles (2008), “payment is the performance of a duty or proise, the discharge...
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