1. Cash or Cash in Advance - Seller receives cash in full from Buyer prior to shipment. Acceptable cash is U.S.

dollars or marketable foreign exchange. For obvious reasons foreign currency !hich cannot be readily converted into dollars "foreign exchange# !ould not be considered $cash$ in this context.
Risk to Buyer %omplete. &elies on seller to ship exactly the goods expected as 'uoted and ordered

(. Confirmed Irrevocable Letters of Credit (CILC) - )rocedures are same as "*# !ith the exception that a U.S. bank $confirms$ the +% or in other !ords substitutes its o!n performance for that of the local foreign bank !hich issues the +%. )ayments under a %,+% are remitted immediately by the U.S. bank issuing its confirmations upon receipt of documents and +%. ,t should be noted that the Buyer pays all charges for opening the +% at its local foreign bank and the Seller pays all charges for confirming the +%. -he U.S. Bank !hich confirms the +% assumes all credit political and exchange risks of the foreign bank and its country.
.ives the seller a double assurance of payments. /epends on the terms of the letter of credit Risk to Buyer Assures shipment is made but relies on exporter to ship goods as described in documents.

*. Unconfirmed Irrevocable Letters of Credit (UILC) - +ocal foreign bank opens its letter of credit "irrevocable promise to pay once terms are met# to Seller on behalf of Buyer. Seller presents documents and +% to U.S. bank for collection. U.S. bank for!ards to issuing foreign bank and payments are remitted in accordance !ith +% "sight to 101 days#. %aution is taken to2 1.# make sure +% is irrevocable and (.# the +% does not call for special terms or conditions !hich cannot be met. -he U.S. bank can provide assistance in this regard.
Seller has single bank assurance of payment and seller remains dependent on foreign bank. Seller should contact his banker to determine !hether the issuing bank has sufficient assests to cover the amount. Risk to Buyer

Same as above 3. Cash Against Documents (CAD) - Buyer deposits cash !ith its local "foreign# bank. Seller presents documents to its U.S. bank for $collection$. U.S. bank sends documents to foreign bank !hich remits payment back through U.S. bank and for!ards documents to buyer. 4. ight Draft!Documents Against "ayment ( D!D") - Same procedure as %A/ "item 3# !ith the exception that a /raft accompanies the documents. -he Buyer has made arrangements !ith its bank to repay the amounts due under the /raft. Until such arrangements are made the bank holds the /raft and the documents. S/5/) means the bank pays at $sight$ i.e. upon presentation !ith the documents.

6. ight Draft!Document Against Acce#tance ( D!DA) - Also kno!n as $-ime /rafts$ because a prescribed period of time elapses before payment7 e.g. *1 61 81 101 days S/5/A. -he procedure is the same as S/5/) "item 4# except in lieu of payment at sight the bank returns the /raft stamped $Accepted$ to the U.S. bank !hich presented it for collection on behalf of the Seller. 9hen the prescribed time period elapses the U.S. bank presents the /raft for payment and the local foreign bank honors its acceptance and remits payment. :. $#en Account ($!A) - -his is the least secure means of foreign sales. ,n lieu of a bank being presented the documents all of the documents are for!arded directly to the Buyer and payment is remitted according to the terms of the invoice. ;et *1 to 101 days are the range of <5A terms. -he flo! of documents is all important because the bearer of documents is the only party !ho can clear the imported merchandise through customs. ,n <5A sales the Buyer not only has immediate access to the merchandise since it possesses the documents but can control repayment at its discretion. For this reason only the most credit!orthy and longstanding customers should be afforded <5A terms. 0. "romissory %otes - .enerally used for medium term "one to five year# sales of capital e'uipment or 'uasi-capital goods. A )romissory ;ote is a signed valid and enforceable obligation to pay a certain amount "$principal$# plus interest by the $=aker$ "or Buyer# to the $)ayee$ "or Seller#. )ayments are made in one or a series of installments until the entire principal is repaid. )romissory ;otes may also be guaranteed by a third party "$.uarantor$# !ho is affiliated !ith the =aker. A .uarantor can be an individual "e.g. o!ner# parent company or financial institution. &arely are promissory notes used for short term sales of non-capital goods.