Question

26.	It is best to require foreign customers that are relatively unknown to you pay in one
	of the two following methods:
	1
	2
27.	Provide 2 problems when credit terms are too strict:
	1
	2

Answer 1

26. It is best to acquire the foreign customers that are relatively unknown to you, pay in one of the following methods:

1. Letter of credit: A letter of credit is a mode of payment used in international trade where the party is unkown to you. Letter of credit means where one bank gives guarantee to another bank ( in foreign country) for payment to specified person at specified conditions.
2. Drafts: Draft is an unconditional order issued by a buyer to the bank to pay a specified amount to the seller at a due date. Drafts are also known as bill of exchange.

27. Two problems when credit terms are too strict:

1. If the credit terms are too strict it will effect the sales as it won't attract the customers as they are required to pay early.
2. Tighter credit policy will lead to pressure on billing and invoices. Continously reminding for payment to customer can erode a buyer's perception for your business.