Topic 7 - Methods of settlement

Question 1

List four basic methods of settlement?

Answer 1

Methods of settlement

1) Open account
2) Documentary collection
3) Documentary credit
4) Payment in advance

Question 2

What is ICC Publication “Uniform Rules for Collections 522”?

Answer 2

Documentary collections are governed by URC 522 when reference is made to their application in the collection instruction

Question 3

State the “Risk Ladder” from highest risk to lowest risk from the buyers perspective

Answer 3

The Risk Ladder

Highest risk to lowest risk

• Payment in advance
• Documentary credit
• Documentary collection
• Open account