Glossary
Chapter 12
advance payment occurs when the terms of the contract require that the importer pay for the goods in advance of receipt.
agents these people generally remunerated on a set commission based on sales and although they often have possession of the goods and receipts, title remains with the exporter until the product is sold.
barter the direct exchange of goods and services between parties without the use of currencies.
bill of lading a contract containing all of the terms and conditions of shipping between the exporter and the shipper.
confirmed letter of credit this guarantees payment by both the exporter’s bank and the importer’s bank.
counterpurchase agreement the agreement where the firm selling the goods or services to a nation is required to spend a portion of the receipts purchasing specific goods or services stipulated as a condition of contract by the purchasing nation.
countertrade the exchange of goods or services for either all or part of the purchase price.
direct exporting full involvement by the exporting company in selling its product directly to buyers within the target market supported by sales representatives or distributors.
distributors take ownership of the product and accept all risks relating to the products subsequent sale.
documentary collection provides for payment against receipt of acceptable documentation and using a third party as intermediary.
export and import brokers facilitate 'matchmaking' between international buyers and sellers offering standardized commodities.
export management companies (EMCs) self-proclaimed experts in international business in a specific geographic area.
export trading company (ETC) type of company where services may include importing: exporting; countertrading services; developing and expanding distribution channels; providing storage facilities; and financing trade, investment projects, and occasionally manufacturing.
exporting selling goods and services to locations outside the home country.
factoring allows the holder of a time draft to obtain cash by assigning or selling the instrument at a discount to a third party.
freight forwarders specialize in transporting goods, facilitating customs documentation, arranging logistics, and transportation services.
importing buying goods and service abroad and bringing them into the home country.
indirect exporting a strategy whereby an exporter contracts with an intermediary located in the home country to sell their product or service to designated foreign market.
intra-corporate transfers the sale of goods and services to a related corporate entity.
irrevocable letter credit this permits the importer’s bank to modify the terms only with the approval of both the exporter and importer.
letter of credit a document issued by a bank following due diligence guaranteeing payment available in the event the importer defaults.
manufacturers' agents solicit domestic orders on behalf of foreign manufacturers.
manufacturers' export agents sell the domestic firms’ goods in the foreign target market.
offset agreement requires the seller to acquire unspecified goods from the purchasing nation in order to offset a hard-currency sale.
open account payment is received after delivering the goods to the purchaser.
revocable letter of credit can be modified at any time without consultation with the exporter or the importer; a very dangerous and tenuous letter of credit.
sales representatives can be either a corporation or an individual engaged to use best efforts to represent the exporter’s product in the target market.
sight draft requires payment at the time the goods are delivered to the importer.
strategic inflection point occurs when the ecosystem of a firm/industry experiences a seismic shift that is so dramatic it requires the organization to radically revise its strategy.
switch trading one company sells for a fee (payable to the purchaser) its obligation to make a purchase in the host nation.
time draft a negotiable instrument that extends the payment date by mutual agreement between the parties to some time after the importer has received the goods.