Traditional Culture Encyclopedia - Traditional festivals - What are the advantages and disadvantages of remittance, collection and letter of credit in international settlement?
What are the advantages and disadvantages of remittance, collection and letter of credit in international settlement?
Remittance and collection are both high-risk commercial credits, while letters of credit are highly reliable bank credits. In international trade, especially in China, letters of credit are basically used as the method of settlement, but opening letters of credit generally requires a deposit, which is costly. Under normal circumstances, the small balance after trade can be collected. If the quantity is large, it is best not to use it, which is very unsafe. Remittances can be divided into letter transfer (M/T), wire transfer (T/T) and draft (D/D). T/T is fast and expensive, but it is lower than L/C and its security is acceptable. Generally, banks transfer money by SWIFT, but it takes a long time to transfer money, and bill transfer is easy to be lost in the mail.
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