Subject of International Business

One of the subjects of international business that I have a particular interest in concerns the different payment tools that importers and exporters use when selling goods. There is an added level of risk present when conducting transactions internationally. This risk is in the form of theft, fraud, non-payment, complications of multiple governing agencies, and the inability to meet time deadlines. There are many financial payment tools that are currently being used to combat the problem of international transaction risk. The most common payment types for an international transaction are a letter of credit, documentary draft for collection, open account, payment in advance, and barter. Most of these transactions involve not only the importer and the exporter, but the respective banks of the parties involved, freight forwarders, and government customs agencies as well. The Role of an Importer An importer is a company that is bringing in, or importing, goods to their domestic market for sale or distribution. Importers benefit from this practice because they can acquire products at a higher quality, or lower price, than would be available domestically. The Role of an Exporter An exporter is a company that is shipping, or exporting, goods outside their domestic market for sale or distribution. Exporters benefit from this practice by making a profit with the sale or transfer of goods to international markets, or by expanding into new, international markets to broaden their customer base. The Role of a Forwarding Company A freight forwarder is a company that ships goods, on a regular basis, to different locations around the world. An exporter will call a forwarder if that exporter wants to ship goods overseas without having to take on the responsibilities of logistics, customs, and paperwork by themselves. A freight forwarder's main concern is the efficient shipment of goods all over the world. Another objective of the forwarder is to make money. They make their profits by streamlining shipments, increasing efficiency, and spreading out costs by moving a constantly high volume of products on a regular, routine basis (Hickman, p.138). Regardless of the forwarder's desire to make a profit off of the exporter, an exporter ends up saving a lot of money by using a forwarder's services (Hickman, p.139). The money that a forwarder might charge to ship a product is miniscule compared to what an exporter would pay if they tried to ship the products without