Financing International Trade
Banks that offer financing for international trade generally use a Letter of Credit which guarantees payment of an invoiced amount by the customer of the bank
Firms that transact business in foreign countries on an ongoing basis often finance at least part of these transactions with funds from banks in the foreign countries, thus minimizing exchange rate risk and enhancing ties to the host community
Transactions Between Subsidiaries are often accomplished by "netting" amounts due between subsidiaries, thus minimizing foreign exchange fees and other transaction costs
- 1994, HarperCollins Publishers