Forms of Short-term Financing/Bank Check

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Unit 7.1-Forms of Short-term Financing 

Introduction | Preparing to Borrow | Vendor Financing | Documentary Collections | Bank Check | Personal Resources | Bank Financing | Export Credit Insurance | Guarantees | Ex-Im Bank Financing | SBA | Equity Investment | Earnings Requirments | Working Capital | Collateral | Resource Management | Primary Differences | Factoring | Forfaiting | Summary | Resources | Activities | Assessment

Bank Check[edit | edit source]

Payment by check by an overseas buyer provides higher risk for a seller. Checks drawn on foreign banks do not clear through the Federal Reserve Bank. These items must be presented directly to the paying bank and can take up to eight weeks or longer to clear (clearing of checks is different in every country throughout the world). The general desired form of payment should be by wire transfer into the seller’s account at the designated bank. The second form is to accept a check drawn on a United States bank in US dollars, which allows you to collect your US dollars through the Federal Reserve Bank under laws of the United States clearing laws. Checks drawn on foreign banks require collection procedures through the banks and can easily be returned for insufficient funds or stop payment. The collection of a foreign check also takes so much time that the seller will have difficulty in applying other collection procedures against a buyer in a foreign country.

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