MBA (General)IV – Semester, International Business Unit IV
Definition of Methods of Foreign Payments and Exchange Rate
Foreign Bills of Exchange: “A bill of exchange is an unconditional order in writing, addressed by one person to another, requesting the person to whom it is addressed to pay a certain sum on demand or on a specified future date “(Inland Bill –Due for the payment is calculated from the date of which it was drawn; Foreign bills –date on which the bill was accepted.)
Gold / Silver
Bank Drafts: International payments
may be made by means of cheque and Bank drafts.
Foreign Bills of Exchange: “A bill
of exchange is an unconditional order in writing, addressed by one person to another,
requesting the person to whom it is addressed to pay a
certain sum on demand or on a specified future date “(Inland Bill –Due for the payment is calculated from the date
of which it was drawn; Foreign bills –date on which the bill was accepted.)
Sight Bill which is honored on presentation.
Short Bill which is payable within 10 days.
Long Bill which matures with 90 days.
Telegraphic Transfers: A sum can be transferred from a bank in one country to a bank in another part of world by cable or telex. It is the
quickest method of transmitting the funds.
Documentary (or reimbursement)
credit:-Transfer bills i.e. Bill of lading, Letters of Credit.
Exchange Rate
The rate which
refers to the demand for the supply of a currency is the external value of it. It measures the number of units of one currency which
exchange, in the foreign exchange market for one unit of another.
E.g.; suppose £1 exchange for $2 that is £1= $2 just
as a commodity is sold and purchase
in the market for some price.
