A. Telegraphic Transfer: It is an order sent by telegraph by a bank in one country to another country for settlement of international indebtedness. It is very fast in making payment.
B. Guarantee Mail Transfer: This is a method of making payments in which a bank guarantees by sending cable instructions to the foreign agent in advance to pay the creditor at an agreed date. Where a mail is guaranteed, the bank undertakes that the payment will be made at a fixed date.
C. Foreign Bill of Exchange: It allows the debtor a period of credit and at the same time enables the period of credit to receive payments at once if it can be discounted.
D. Mail Transfer: It is an order from a bank to its agent for payment of a given sum of money to a foreign creditor by means of a letter or airmail. It is not as expensive as a telegraphic transfer.
E. Travelers Cheque: Cheques are issued to people travelling overseas in order to facilitate their commercial transactions. The beneficiary is able to obtain cash in a foreign country when travelling abroad. They are drawn on commercial banks requesting payments.
F. Letter of Hypothecation: This accompanies a document bill authorizing the selling of goods in the foreign market for the best price obtainable if payment of the bill is refused. The goods will be sold and expenses removed before remitting the money to the owner.
G. Bank Draft: This is a cheque drawn on the bank in which the bank undertakes to pay the sum stated to the payee. It is drawn on the debtor’s bank for foreign payment.
H. Factoring: It is a method of financing export whereby the factor purchases the clients book debts and administers the control of credit extended to customers in order to ensure payment. It provides succor to the client in time of needs based on the agreement that subsists between the factor and the company.
I. Letter of Credit: This is a letter from a bank to its agent abroad authorizing the payment of a specified sum to a person named in the letter. It is a useful means of settlement for a foreign transaction. Letter of credit can be irrevocable or revocable.
(i) Irrevocable: The negotiating bank guarantee payment to the beneficiary should the issuing bank fail to honour it. It cannot be cancelled or revoked without the consent of the beneficiary.
(ii) Revocable: This can be referred to as an unconfirmed letter of credit. The issuing bank can cancel it before the expiry date without the consent of the beneficiary. There is no undertaking by the bank to accept such bills. Which means it can be cancelled at will.
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