Financing Exports and Imports Mechanisms have evolved over centuries to ensure that goods and payments can be exchanged by parties that hardly know each other. Documents are prepared and used throughout the process, which are recognized internationally. The paperwork and fees can add substantially to the cost of goods, but they remain an accepted part of international trade. In many international trade transactions, the buyer and seller do not know each other well, and they have not developed a relationship based on trust and a history of shipment of goods and payment for those goods. The buyers and sellers turn to banks as intermediaries, but banks do not want to handle merchandise. Documents and intermediaries have evolved over centuries to facilitate trade and financing. Buyers and sellers must understand the steps and sequences that occur to be able to trade successfully. The exchange of goods, paperwork, and payment is complicated. Read the hints for each item, then arrange the items in the right sequence. Goods ordered: An importer who does not know the exporter orders merchandise for use or resale. Importer pays his bank: Once the documentation is complete and the importer receives the merchandise, he or she pays the bank. Exporter sells draft: The exporter sells the draft at a discount to the bank to expedite his or her cash flow. Goods shipped: The exporter’s bank notifies the exporter that payment will be made according to the terms of the letter of credit, and the exporter ships the goods. Importer secures L/C: The bank agrees to make payments once certain conditions are met, and later collects payment from the importer. Banks interact: The exporter’s bank and the importer’s bank verify conditions have been met by the documentation and payment is authorized. Exporter receives bill of lading: The exporter receives paperwork from the common carrier that will ship the goods to the foreign firm. Exporter presents papers to the bank: The exporter presents the bill of lading and other paperwork to the bank. Rank the options below. Exporter sells draft Exporter sells draft open choices for ranking No answer 1 2 3 4 5 6 7 8 Exporter presents papers to bank Exporter presents papers to bank open choices for ranking No answer 1 2 3 4 5 6 7 8 Exporter receives bill of lading Exporter receives bill of lading open choices for ranking No answer 1 2 3 4 5 6 7 8 Goods shipped Goods shipped open choices for ranking No answer 1 2 3 4 5 6 7 8 Importer secures L/C Importer secures L/C open choices for ranking No answer 1 2 3 4 5 6 7 8 Goods ordered Goods ordered open choices for ranking No answer 1 2 3 4 5 6 7 8 Importer pays his bank Importer pays his bank open choices for ranking No answer 1 2 3 4 5 6 7 8 Bank interact