I (Meaning and importance of Exports) Unit Structure

2) Credit Worthiness of the Buyer 
The method of payment may also depend on the 
creditworthiness of the buyer. If the importer enjoys a sound 
creditworthiness, then the exporter may accept the method of 
“Documents Against Acceptance”. 
3) Econom
ic Situation in the Importer‘s Country 
If the economic conditions are poor in the importer‟s country, 
then the exporter may not like to offer longer period terms. 
4) Size of the Order 
The exporter also has to consider the size of the order. If the 
order is substantial, then the exporter may receive the money in 
installment, and as such longer credit period can be given. The 
exporter may agree toe “Documents Against Acceptance” method. 
5) Competitors Credit Terms 
The exporters also have to find out the credit terms offered 
by the competitors. If they allow a longer period of credit, the 
exporter may also follow the same. 
6) Financial Position of the Exporter 
If the exporter‟s financial position is sound, the exporter may 
offer a longer credit term to the importer. 
7) Exchange and Import Controls in the Importing Country 
 

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The exporter has to find out whether the importer has 
complied with the exchange and import controls. If there are no 
problems in respect of exchange ad import controls, exporter may 
give a longer credit period. 
8) Relations 
 
 
The exporter may consider trading relations with the 
importer. If the exporter has good relations, then he may provide 
longer credit terms. 
11.12
 LETTER OF CREDIT 
 
11.12.1 
MEANING 
Letter of credit has become the most popular from in recent 
times. As it is more secured as compared to other methods of 
payments. 
Letter of credit is as authorization issued by the opening 
bank to the negotiation bank that if the exporter presents the 
relevant set of documents, make the payment.