What is a major benefit to using Incoterms when sourcing goods internationally?
Answer(s): C
Incoterms can replace lengthy contract clauses as they replace the need for contracts to detail which party is responsible for organising transport, paying duties, having the insurance etc. Incoterms is an odd one for exam topics- some students say it was a huge part of their exam and there were many questions on this. Others said there were just one or two. Questions get randomly assigned from the bank so it's completely random how many you'll get on this topic.
Which of the following payment mechanisms is most beneficial to the supplier?
Answer(s): B
cash in advance is the most beneficial to a supplier.Open account /credit account is the most beneficial to the buyer. Learn this as it's a known exam topic.
When using a 'credit account' payment mechanism, when does a supplier receive payment for the goods?
Answer(s): A
In a 'Credit Account' payment mechanism- the supplier receives payment after the goods are delivered, in line with agreed payment terms (which may be 30 days or something like that).
Khalid is a procurement manager in the UK who is looking to source exotic fruit for a retailer. As this type of fruit doesn't grow naturally in the UK Khalid is looking at international suppliers, but is worried about variations in exchange rates. He is considering asking the suppliers to provide quotes in their local currencies. Will this reduce the risk posed to Khalid?
So you can immediately discount the options starting with yes. Quoting in GBP / £ rather than the supplier's currency reduces the risk to the buyer. It will not re- duce the cost of the import, and will probably increase it as the supplier is then taking on the risk of currency fluctuations.
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