Characteristics of Cash in Advance

Applicability

Recommended for use in high-risk trade relationships or export markets, and ideal for Internet-based businesses.

Risk

Exporter is exposed to virtually no risk as the burden of risk is placed nearly completely on the importer.

Pros

•Payment before shipment • Eliminates risk of non-payment

Cons

• May lose customers to competitors over payment terms

• No additional earnings through financing operations

Source :http://trade.gov/media/publications/abstract/trade_finance_guide2008desc.html

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