Question

let's assume you are a financial manager at MNC, and just exported goods to Mexico, how a banker's acceptance would be beneficial to your company as an exporter?

Answer 1

Banker's acceptance- It is a guarantee, given by financial institution (banks) to pay a sum of money to the exporter after a period of time. In export-import, there may be counter party risk, importer may default in payment or he can delay the payment so for that matter, exporter goes to the bank for guaranteed payment after the export is made. Bank promises to pay a specific amount at a specific date by and recoups money by debiting importer's account.

IT would be very beneficial for an exporter, it is just like post dated check. BAs are traded in the secondary market. BA provides safety to the exporter, it makes sure that exporter will get payment on time.