alleryStart learning →What does a red clause letter of credit allow the seller to do?
ACancel the order freely
BTransfer it to a third party
CPay the bank in instalments
DDraw an advance before shipping
Answer & Solution
Correct answer: D. Draw an advance before shipping
A red clause credit lets the seller take part of the money from the bank before sending the products.
Keep practising International Working Capital Management
Browse all International Working Capital Management questions for CA Final, or explore more Strategicfinancialmanagement topics.
Related questions
In a multilateral net settlement system, how does each participant settle?What is the primary objective of netting in financial markets?When does close-out netting normally operate?What does positive pay reduce?What does a lockbox service help a company do?Which bank service moves surplus balances into a money market fund overnight?Which technique converts debtors to cash in short-term financing?Which firm policy directly affects the cash conversion cycle by governing sales on credit?