Discuss one of the methods available to companies when seeking financial resources for their international production. What do you think the advantages of this method are? Would you change methods if operating in another country such as Brazil or South Africa?
Companies engaged in international business often face this issue. Typically, companies will turn to banks or investors to obtain financing. This works of course, but it can tie up other assets/collateral. What other options exist if you don’t have enough collateral/credit to borrow from a bank; or can’t attract investment because you don’t have enough equity left?
Hint: look at how some payment methods can be used in these situations. Again, go to edc.ca and ask about how certain payment methods fit here.
Some payment methods, especially a Confirmed Letter of Credit (also called a Documentary Credit) can be used as an asset/collateral. That’s right, you can use it to borrow the Working Capital you need to fill a contract. What other financing methods can be used? I would like to draw your attention to EDC (edc.ca).
EDC sells Export Credits Insurance which can also be used as collateral to borrow the Working Capital you need to fill your contract. It also protects you against the risk of non-payment (which is the biggest risk exporters face). A variety of other methods also exist…
this is a discussion question, and the response has to be around 200-250 words. thanks
