Pages

Friday, April 24, 2015

Many ways to make money through a website


Many  ways to make money through a website


Many  ways to make money through a website and a lot of methods to make money through blogs.
For example, one could suggest that blending AdSense ads with the content is a way to make money from a website. In reality it’s not; it’s just a way to make more money by improving your ad click-through rate. The real monetization method behind it is a PPC ad network.
The list is divided into direct and indirect methods, and examples and links are provided for each point. Enjoy!

Direct Methods

1. PPC Advertising Networks
Google AdSense is the most popular option under this category, but there are also others. Basically you need to sign up with the network and paste some code snippets on your website. The network will then serve contextual ads (either text or images) relevant to your website, and you will earn a certain amount of money for every click.
The profitability of PPC advertising depends on the general traffic levels of the website and, most importantly, on the click-through rate (CTR) and cost per click (CPC). The CTR depends on the design of the website. Ads placed abode the fold or blended with content, for instance, tend to get higher CTRs. The CPC, on the other hand, depends on the nice of the website. Mortgages, financial products and college education are examples of profitable niches (clicks worth a couple of dollars are not rare), while tech-related topics tend to receive a smaller CPC (sometimes as low as a couple of cents per click).
The source of the traffic can also affect the overall CTR rate. Organic traffic (the one that comes from search engines) tends to perform well because these visitors were already looking for something, and they tend to click on ads more often. Social media traffic, on the other hand, presents terribly low CTRs because these visitors are tech-savvy and they just ignore ads.
List of popular CPC advertising networks:
2. CPM Advertising Networks
CPM advertising networks behave pretty much as PPC networks, except that you get paid according to the number of impressions (i.e., page views) that the ads displayed on your site will generate. CPM stands for Cost per Mille, and it refers to the cost for 1,000 impressions.
A blog that generates 100,000 page views monthly displaying an advertising banner with a $1 CPM, therefore, will earn $100 monthly.
CPM rates vary with the network, the position of the ad and the format. The better the network, the higher the CPM rate (because they have access to more advertisers). The closer you put the ad to the top of the page, the higher the CPM. The bigger the format (in terms of pixels), the higher the CPM.
You can get as low as $0,10 and as high as $10 per 1,000 impressions (more in some special cases). CPM advertising tends to work well on websites with a high page views per visitor ratio (e.g., online forums, magazines and so on).
List of popular CPM advertising networks:
3. Direct Banner Advertising
Selling your own advertising space is one of the most lucrative monetization methods. First and foremost because it enables you to cut out the middleman commissions and to determine your own rates. The most popular banner formats on the web are the 728×90 leaderboard, the 120×600 skyscraper, the 300×250 rectangle and the 125×125 button.
The downside of direct banner advertising is that you need to have a big audience to get qualified advertisers, and you will need to spend time managing the sales process, the banners and the payments.
Related links:
4. Text Link Ads
After Google declared that sites selling text links without the nofollow tag would be penalized, this monetization method became less popular.
Many website owners are still using text links to monetize their sites, though, some using the nofollow tag and some not.
The advantage of this method is that it is not intrusive. One can sell text links directly through his website or use specialized networks like Text-Link-Ads and Text-Link-Brokers to automate the process.
Text link marketplaces and networks:
5. Affiliate Marketing
Affiliate marketing is a very popular practice on the Internet. Under this system you have a merchant that is willing to let other people (the affiliates) sell directly or indirectly its products and services, in exchange for a commission. Sometimes this type of advertising is also called CPA (cost per action) or CPL (cost per lead) based.
Affiliates can send potential customers to the merchant using several tools, from banners to text links and product reviews.
In order to find suitable affiliate programs you can turn to individual companies and publishers like Dreamhost and SEOBook, or join affiliate marketplaces and networks.
List of popular affiliate marketplaces and networks:
6. Monetization Widgets
The latest trend on the web are widgets that let you monetize your website. Examples include Widgetbucks and SmartLinks. Some of these services operate under a PPC scheme, others behave like text link ads, others yet leverage affiliate links.
Their main differentiator, however, is the fact that they work as web widgets, making it easier for the user to plug and play the service on its website.
List of companies that provide monetization widgets:
7. Sponsored Reviews
PayPerPost pioneered this model, with much controversy on the beginning (related to the fact that they did not require disclosure on paid posts). Soon other companies followed, most notably Sponsored Reviews and ReviewMe, refining the process and expanding the paid blogging model.
Joining one of these sponsored reviews marketplaces will give you the opportunity to write sponsored posts on a wide range of topics. Not all bloggers are willing to get paid to write about a specific product or website (because it might compromise the editorial credibility), but the ones who do are making good money out of it.
If your blog has a big audience you could also offer sponsored reviews directly, cutting off the commissions of the middleman.
List of sponsored reviews and paid blogging networks:
8. RSS Feed Ads
With the quick adoption of the RSS technology by millions of Internet users, website owners are starting to find ways to monetize this new content distribution channel.
Feedburber already has its own publisher network, and you can sign-up to start displaying CPM based advertising on your feed footer. Bidvertiser recently introduced a RSS feed ad option as well, with a PPC scheme.
Finally, some blogs are also opting to sell banners or sponsored messages on their feed directly. John Chow and Marketing Pilgrim are two examples.
Related links:
9. Sponsors for Single Columns or Events
If you website has specific columns or events (e.g., a weekly podcast, an interview series, a monthly survey, a special project) you could find companies to sponsor them individually.
This method increases the monetization options for website owner, while giving advertisers the possibility to target a more specific audience and with a reduced commitment.
Mashable illustrates the case well. They have several advertising options on the site, including the possibility to sponsor specific columns and articles, including the “Daily Poll” and the “Web 2.0 Invites.”
Problogger also runs group writing projects occasionally, and before proceeding he publicly announce the project asking for sponsors.
10.Premium Content
Some websites and blogs give away part of their content for free, and charge for access to the premium content and exclusive tools.
SEOMoz is a good example. They have a very popular blog that gives advice and information on wide range of SEO related topics. On top of that visitors can decide to become premium members. It costs $48 monthly and it grants them access to guides, tools and other exclusive material.
11. Private Forums
While the Internet is populated with free forums, there is also the possibility to create a private one where members need to pay a single or recurring fee to join.

SEO Blackhat charges $100 monthly from its members, and they have thousands of them. Obviously in order to charge such a price for a forum membership you need to provide real value for the members (e.g., secret techniques, tools, and so on).
Performancing also launched a private forum recently, focused on the networking aspect. It is called The Hive, and the monthly cost is $10.
These are just two examples. There are many possibilities to create a private and profitable forum, you just need to find an appealing angle that will make it worth for the members.
List of popular forum software:
12. Job Boards
All the popular blogs are trying to leverage job boards to make some extra income. Guy Kawasaki, ReadWriteWeb, Problogger… you name it.
Needless to say that in order to create an active and profitable job board you need first to have a blog focused on a specific niche, and a decent amount traffic.
The advantage of this method is that it is passive. Once you have the structure in place, the job listings will come naturally, and you can charge anywhere from $10 up to $100 for each.
List of popular job board software:
13. Marketplaces
Sitepoint is the online marketplace by excellence. Some websites and blogs, however, are trying to replicate that model on a smaller scale.
Depending on your niche, a market place that allows your visitors to buy, sell and trade products could work well. Over the time you could start charging a small fee for new product listings.
The problem with this method is that there are no standard software on the web, so you would need to hire a coder to get a marketplace integrated into your website.
You can see an example of a marketplaces being used on EasyWordpress and on Mashable.
14. Paid Surveys and Polls
There are services that will pay you money to run a small survey or poll on your website. The most popular one is called Vizu Answers.
Basically you need to sign up with them, and select the kind of polls that you want to run your site. Most of these services operate under a CPM model.
15. Selling or Renting Internal Pages
Million Dollar Wiki made this concept popular, but it was being used on the web for a long time around (check Pagerank10.co.uk for instance).
These websites sell for a single fee or rent for a recurring fee internal pages on their domain. Usually they have either high Pagerak or high traffic, so that people purchasing a page will be able to benefit in some way.
Implementing this method on a small blog would be difficult, but the concept is interesting and could be explored further.
16. Highlighted Posts from Sponsors
Techmeme probably pioneered this idea, but somehow it has not spread to other websites. The tech news aggregator displays editorial posts on the left column, and on the sidebar they have a section titled “Techmeme Sponsor Posts.”
On that section posts from the blog of the advertisers get highlighted, sending qualified traffic their way. Considering that the monthly cost for one spot is $5000 and that they have around 6 sponsors at any given time, it must be working well.
17. Donations
Placing a “Donate” link or button on a website can be an efficient way to earn money, especially if your blog is on a niche where readers learn and gain value from your content.
Personal development and productivity blogs, for instance, tend to perform well with donation based systems (one good example being Steve Pavlina).
A small variation of this method appeared sometime ago with the Buy Me a Beer plugin. This WordPress plugin enables you to insert a customized message at the bottom of each article, asking the readers to chip in for a beer or coffee.
18. In-text Adverting
In-text adverting networks like Kontera and Vibrant Media will place sponsored links inside your text. These links come with a double underline to differentiate them from normal links, and once the user rolls the mouse over the link the advertising will pop. Should the user click on it the site owner will make some money.
Some people make good money with this method, but others refrain from using it due to its intrusiveness. It is also interesting to note that very few mainstream websites have experimented with in-text advertising.
19. Pop-ups and Pop-unders
Pop-ups are a common yet annoying form of advertising on the Internet. If you are just trying to make a much money as possible from your website, you could experiment with them.
If you are trying to grow the traffic and generate loyal visitors, however, you probably should stay away from them. Just consider the hundreds of pop-up blockers out there: there is a reason why they are so popular.
Ad networks that use pop-ups:
20. Audio Ads
Also called PPP (Pay Per Play), this advertising method was introduce by Net Audio Ads. the concept is pretty simple: play a small audio advertising (usually 5 seconds) every time a visitor enters into your website. The user should not be able to stop it, creating a 100% conversion rate based on unique visitors.
The company is still rolling tests, but some users are reporting to get from a $4 to a $6 CPM. Regardless of the pay rate, though, this is a very intrusive form of advertising, so think twice before using it.
21. Selling the Website
Selling your website could be your last resource, but it has the potential to generate a big sum of money in a short period of time.
Market places on online forums like DigitalPoint and Sitepoint are always active with website buyers and sellers. Keep in mind that they most used parameter to determine the value of a website is the monthly revenue that it generates, multiplied by a certain number (the multiplier can be anything from 5 to 30, depending on the expectations of the seller, on the quality of the site, on the niche and other factors).
Some people also make money trading and flipping websites. They either create them from scratch or buy existing ones, and after some revamping they sell them for a profit.
Related links:

Indirect Methods

22. Selling an Ebook
Perhaps one of the oldest money making strategies on the web, using a website to promote a related ebook is a very efficient way to generate revenue.
You could either structure the website around the book itself, like SEOBook.com, or launch the ebook based on the success of the website, like FreelanceSwitch did we the book How to be a Rockstar Freelancer.
Related links:
23. Selling a Hardcover Book
Many authors and journalists leverage their blogs or websites to sell copies of hardcover books. Examples include Guy Kawasaki, Seth Godin and Malcolm Gladwell.
While most of these people were already renowned authors before they created their website, one could also follow the other way around. Lorelle VanFossen did exactly that with her Blogging Tips book. First she built her authority on the subject via her blog, and afterwards she published the book.
List of self publishing and publishing services:
24. Selling Templates or WordPress Themes
As more and more people decide to get an online presence, website templates and WordPress themes become hotter and hotter.
On this segment you have mainstream websites like TemplateMonster, as well as individual designers who decide to promote and sell their work independently.
Brian Gardner and Unique Blog Designs are two examples of websites that make money with the sales of premium and custom WordPress themes.
25. Offering Consulting and Related Services
Depending on your niche, you could make money by offering consulting and related services. If you are also the author of your blog, the articles and information that you will share will build your profile and possibly certify your expertise on that niche, making it easier to gain customers.
Chris Garrett used a similar strategy. First he created a highly influential blog on the blogging and new media niche, and afterwards he started offering consulting services to clients with related problems and needs.
26. Creating an Email List or Newsletter
Email lists and newsletters represent one of the most powerful marketing and money making tools on the Internet. They offer incredible conversion rates, and the possibility to call people to action in a very efficient way.
Creating a big list is a difficult task though, so if you have a popular website you could leverage it to increase the number of subscribers on your list.
Yaro Starak is a famous Internet marketer, and if you visit his blog you will notice that right on top he has a section encouraging visitors to subscribe to his email newsletter. Yaro generates five figures in revenues each month from his email newsletters, proving that this method works.
List of software to manage email newsletters:
27. Mentoring programs
People are willing to pay for someone or something that will teach them and give them knowledge (as opposed to mere information). Education is one of the biggest industries in the world, and the online landscape behaves in a similar way.
Creating a mentoring program related to the niche of your website could be very profitable if you manage to structure and promote it adequately. There is a wide range of media and tools that you can use to deliver the information, from text articles to audio and video lessons.
Brian Clark leveraged the success of Copyblogger to launch a mentoring program teaching people how to build membership and how to sell content online. The program is titled Teaching Sells, and it costs $97 monthly. Sounds expensive, but they have over 1,000 members.
28. Creating a conference around the website
If your website takes off and becomes an authority on its niche, you could create a conference around it. Depending on the size of your audience, the event could attract thousands of people, and you could make money directly from conference passes and sponsors.
Search Engine Land, for instance, created a series of conferences that visit several cities on the United States and on other countries as well. The conferences are called Search Marketing Expo, and the tickets and passes cost thousands of dollars.


Notice: This topic was made for exchange views or knowledge purposes only. I am not in charge for any illegal for using of this method. Only the user will responsible about the matter ! All the article of this exposure is not originally mine! Therefore, use it at your own risk!!
It is mentionable here that the comment box is open for all of you. Please to share your views or reviews on this topic for many users took advantage of the comment box to split the readers! Thus, any transaction between you and anybody expansion anything here is out of my responsibility. Thank you!
I have included here the article for alertness of all bankers and customers. I do believe that all of bankers and customers have to know how to hack ATM and bank account to take preventive measure against hacking.
Enjoy all of you Guys!


ATM is the acronym of automatic teller machine (ATM),which is also known  as  an automated banking machine (ABM) in Canada, is a computerized telecommunications device that provides the clients of a bank or financial institution with right of entry to financial transactions in a public space without any a cashier, human clerk or bank teller

You have to know how ATM (Auto Teller Machine) works?

Most of the people known that money is filled in a money box in the ATM MACHINE which is placed in  right inside of the house where the machine is setup with enough security.

If anyone intend to hack this machine manually, He should have to get an ATM card, whether it is valid or not, as long as it can freely enter into the machine. Then get & light the candle or should i say provide a candle wax and  apply to cover the panel on the ATM CARD, covering that panel will make the card look defualt to the machine.

At this time, go to any Bank near you and try this trick, but if you are caught by security, that is your own problem-solving matter not mine. When you get to the machine, insert the card and enter a default pin which is 0000. What have you seen ? Wait a while and see the action afterwards. The ATM machine will give out cash based on the amount requested. But sometimes the machine would say "card not smart" or it would just eject your card. The reasons here is because some atm machines are upgraded while others are not.

How do you know the machine is upgraded?
To know an upgraded ATM machine, you will have observed that most times when you use a particular ATM machine, as the machine is give out  the cash, the bank will also send you a debit alert. If the machine is not upgraded, it may take up to 30 minutes before the bank sends a debit alert. The candle trick is 60% efficient on a machine that is not upgrade but it may not work on upgraded machine because of its sensitivity.

ATM hacking is illegal for  all countries & is nothing but bank robbing. If you choose to engage in such activities, you are deserved the full force of the law.
The purpose of exposing this hacking technique is not to encourage thieves but to persuade banks to improve security. Ironically, this hack takes advantage of a security feature that is designed to protect our cash in case we are being mugged at the ATM, or we just forget.

Security of ATM
Security 1:
Most ATM’s are covered by CCTV. The thief will therefore have his face covered.
Security2:
The thief will have to wait about 20 seconds (which can seem like an eternity when in a rush) and the ATM may make some noise thereafter. The best time to attempt this hack is therefore at night, when there is nobody around. Remember, most ATM’s are accessible 24 hours a day.
Security 3:
Apparently the thief will need to know the pin number. This hack is not about hacking the pin. The thief can use their own credit card, at least once.
Security4:
The thief must find out whether the bank operates a ‘cash retraction/retention policy’ for their ATM machines. Most banks do have such a policy.

The Methods or Technique
Step 1:
The burglar uses an available credit/debit card (preferably with a large withdrawal limit) and selects the option to withdraw a specific amount of cash. The greater the number of notes the thief withdraws, the easier step 2 becomes. The card is returned and the cash is released into the cash vending machine.
Step 2:
 This is the serious point. Calm and have steady hands are essential: The burglar holds firm of the top or bottom few notes of the cash quantity (with a slight push into the vending machine) with one hand and with the other hand, slide- pulls the remaining (larger quantity) of cash from the vending machine.
Step 3:
If the burglar has successfully managed to keep a few notes in the cash vending machine, he has to about wait 20 seconds. Warning: The ATM machine may make a few noises. But after the elapsed time, the ATM will take the remaining cash back into the ATM.
Having assumed someone is attempting to attack the thief, the ATM takes the cash back and cancels the entire transaction. ATM’s can count the cash out but can’t count the cash back into the machine.

If the burglar chose to withdraw $500 and retain $50 within the ATM, the bank will cancel the entire $500 transaction. And the burglar will have pocketed $450 of ‘free cash’.

There are various way  banks can do to improve their security. If machines can count cash out, they should be able to count incoming cash from the same cash vending machine. Or banks may disable the automatic cash retraction policy and have the account holder come in to the bank to make a claim.

Some banks  have cancelled their cash retraction policy, altogether.

But banks in the UK appear to be moving in the opposite direction. In the past, banks such as HSBC, Royal Bank of Scotland (RBS) and Tesco Bank held on to retracted money in reserve until the account holder made a claim.

Barclays Bank plc and Lloyds TSB Group have an automatic cast re-crediting policy, as do Santander but only if the account holder is a Santander customer.

It is time for banks to improve their ATM technology so the cash can be counted back into the machine.

  • 1. Mrs. Charu Rastogi, Asst. Prof.METHODS OF PAYMENT ININTERNATIONAL TRADE/EXPORT ANDIMPORT FINANCEInternational Business Management
  •  
  • 2. WORLD BANK¢ The World Bank is an international financial institution that provides loans to developing countries for capital programs Mrs. Charu Rastogi, Asst. Prof.¢ The World Banks official goal is the reduction of poverty.¢ According to the World Banks Articles of Agreement (as amended effective 16 February 1989), all of its decisions must be guided by a commitment to promote foreign investment, international trade, and facilitate capital investment¢ The World Bank comprises two institutions: — The International Bank for Reconstruction and Development (IBRD) lends to governments of middle-income and creditworthy low-income countries. — The International Development Association (IDA) provides interest-free loans—called credits— and grants to governments of the poorest countries.
  •  
  • 3. EXPORT AND IMPORT FINANCE METHODS¢ Accounts Receivable Financing — An exporter that needs funds immediately may obtain a bank loan that is secured by an assignment of the account receivable¢ Factoring (Cross-Border Factoring) Mrs. Charu Rastogi, Asst. Prof. — The accounts receivable are sold to a third party (the factor), that then assumes all the responsibilities and exposure associated with collecting from the buyer.¢ Letters of Credit (L/C) — These are issued by a bank on behalf of the importer promising to pay the exporter upon presentation of the shipping documents. — The importer pays the issuing bank the amount of the L/C plus associated fees. — Commercial or import/export L/Cs are usually irrevocable. — The required documents typically include a draft (sight or time), a commercial invoice, and a bill of lading (receipt for shipment). — Sometimes, the exporter may request that a local bank confirm (guarantee) the L/C. — Variations include ¢ standby L/Cs : funded only if the buyer does not pay the seller as agreed upon ¢ transferable L/Cs : the first beneficiary can transfer all or part of the original L/C to a third party ¢ assignments of proceeds under an L/C : the original beneficiary assigns the proceeds to the end supplier
  •  
  • 4. EXPORT AND IMPORT FINANCE METHODS¢ Banker’s Acceptance (BA) — This is a time draft that is drawn on and accepted by a bank (the importer’s bank). The accepting bank is obliged to pay the holder Mrs. Charu Rastogi, Asst. Prof. of the draft at maturity. — If the exporter does not want to wait for payment, it can request that the BA be sold in the money market. Trade financing is provided by the holder of the BA. — The bank accepting the drafts charges an all-in-rate (interest rate) that consists of the discount rate plus the acceptance commission. — In general, all-in-rates are lower than bank loan rates. They usually fall between the rates of short-term Treasury bills and commercial papers.¢ Working Capital Financing ¢ Banks may provide short-term loans that finance the working capital cycle, from the purchase of inventory until the eventual conversion to cash.
  • 5. EXPORT AND IMPORT FINANCE METHODS¢ Medium-Term Capital Goods Financing (Forfaiting) — The importer issues a promissory note to the exporter to pay for its imported capital goods over a period that generally Mrs. Charu Rastogi, Asst. Prof. ranges from three to seven years. — The exporter then sells the note, without recourse, to a bank (the forfaiting bank).¢ Countertrade — These are foreign trade transactions in which the sale of goods to one country is linked to the purchase or exchange of goods from that same country. — Common countertrade types include barter, compensation (product buy-back), and counterpurchase. — The primary participants are governments and multinationals.
  • 6. METHODS OF PAYMENT IN INTERNATIONALTRADE¢ To succeed in today’s global marketplace and win sales against International trade presents a spectrum of risk, which causes uncertainty over the timing of payments Mrs. Charu Rastogi, Asst. Prof. between the exporter (seller) and importer (foreign buyer).¢ For exporters, any sale is a gift until payment is received.¢ Therefore, exporters want to receive payment as soon as possible, preferably as soon as an order is placed or before the goods are sent to the importer.¢ For importers, any payment is a donation until the goods are received.¢ Therefore, importers want to receive the goods as soon as possible but to delay payment as long as possible, preferably until after the goods are resold to generate enough income to pay the exporter.
  • 7. METHODS OF PAYMENT IN INTERNATIONAL TRADE :CASH IN ADVANCE / PREPAYMENTS¢ With cash-in-advance payment terms, the exporter can avoid credit risk because payment is received before the ownership of the goods is transferred. Mrs. Charu Rastogi, Asst. Prof.¢ Wire transfers and credit cards are the most commonly used cash-in-advance options available to exporters.¢ However, requiring payment in advance is the least attractive option for the buyer, because it creates cash- flow problems. Foreign buyers are also concerned that the goods may not be sent if payment is made in advance.¢ Thus, exporters who insist on this payment method as their sole manner of doing business may lose to competitors who offer more attractive payment terms.
  • 8. METHODS OF PAYMENT IN INTERNATIONAL TRADE:LETTERS OF CREDIT¢ Letters of credit (LCs) are one of the most secure instruments available to international traders.¢ An LC is a commitment by a bank on behalf of the buyer Mrs. Charu Rastogi, Asst. Prof. that payment will be made to the exporter, provided that the terms and conditions stated in the LC have been met, as verified through the presentation of all required documents.¢ The buyer pays his or her bank to render this service.¢ An LC is useful when reliable credit information about a foreign buyer is difficult to obtain, but the exporter is satisfied with the creditworthiness of the buyer’s foreign bank.¢ An LC also protects the buyer because no payment obligation arises until the goods have been shipped or delivered as promised.
  • 9. METHODS OF PAYMENT IN INTERNATIONAL TRADE:DOCUMENTARY COLLECTIONS/DRAFTS/BILLS OFEXCHANGE)¢ A documentary collection (D/C) is a transaction whereby the exporter entrusts the collection of a payment to the remitting bank (exporter’s bank), which sends documents to a collecting bank (importer’s bank), along with instructions for payment. Mrs. Charu Rastogi, Asst. Prof.¢ Funds are received from the importer and remitted to the exporter through the banks involved in the collection in exchange for those documents.¢ D/Cs involve using a draft that requires the importer to pay the face amount either at sight (document against payment) or on a specified date (document against acceptance).¢ The draft gives instructions that specify the documents required for the transfer of title to the goods. Although banks do act as facilitators for their clients, D/Cs offer no verification process and limited recourse in the event of non-payment.¢ Drafts are generally less expensive than LCs.
  • 10. METHODS OF PAYMENT IN INTERNATIONAL TRADE:OPEN ACCOUNT¢ An open account transaction is a sale where the goods are shipped and delivered before payment is due, which is usually in 30 to 90 days. Mrs. Charu Rastogi, Asst. Prof.¢ Obviously, this option is the most advantageous option to the importer in terms of cash flow and cost, but it is consequently the highest risk option for an exporter.¢ Because of intense competition in export markets, foreign buyers often press exporters for open account terms since the extension of credit by the seller to the buyer is more common abroad. Therefore, exporters who are reluctant to extend credit may lose a sale to their competitors.¢ However, the exporter can offer competitive open account terms while substantially mitigating the risk of non-payment by using of one or more of the appropriate trade finance techniques, such as export credit insurance.
  • 11. Mrs. Charu Rastogi, Asst. Prof.COMPARISON
  • 12. COMPARISON Cash in Letter of Credit DC/BoE Open Account AdvanceTime of Before When shipment is On presentation of As agreed Mrs. Charu Rastogi, Asst. Prof.Payment Shipment made draft uponGoods After payment After payment Beforeavailable to After payment paymentbuyers Relies on buyerRisk to Disposal of None Very little - None to pay asexporter unpaid goods agreed upon Assured shipment but Relies on Relies on exporter relies on exporter toRisk to exporter to to ship goods as ship goods as Noneimporter ship goods as described in the described in the ordered documents documents
  • 13. LETTER OF CREDIT: PROCEDURE 1. Sale Contract Buyer (Importer) Seller (Exporter) 5. Deliver Goods Mrs. Charu Rastogi, Asst. Prof.2. Request 8. Documents 6. Present 4. Deliver Letterfor Credit and claim for Documents of Credit payments 7. Present Documents Importer’s bank Exporter’s bank (Issuing Bank) (Advising Bank) 3. Send Credit
  • 14. TYPES OF LETTER OF CREDIT¢ Irrevocable and revocable letters of credit — A revocable letter of credit can be changed or cancelled by the bank that issued it at any time and for any reason. Mrs. Charu Rastogi, Asst. Prof. — An irrevocable letter of credit cannot be changed or cancelled unless everyone involved agrees. Irrevocable letters of credit provide more security than revocable ones.¢ Confirmed and unconfirmed/Advised letters of credit — When a buyer arranges a letter of credit they usually do so with their own bank, known as the issuing bank. The seller will usually want a bank in their country to check that the letter of credit is valid. — For extra security, the seller may require the letter of credit to be confirmed by the bank that checks it. By confirming the letter of credit, the second bank agrees to guarantee payment even if the issuing bank fails to make it. So a confirmed letter of credit provides more security than an unconfirmed one. — In case of unconfirmed LC, the advising bank forwards an unconfirmed letter of credit directly to the exporter without adding its own undertaking to make payment or accept responsibility for payment at a future date, but confirming its authenticity.
  • 15. TYPES OF LETTER OF CREDIT¢ Transferable letters of credit — A transferable letter of credit can be passed from one beneficiary (person receiving payment) to others. Theyre Mrs. Charu Rastogi, Asst. Prof. commonly used when intermediaries are involved in a transaction.¢ Stand-by LC — A standby letter of credit is like a guarantee that is used as support where an alternative, less secure, method of payment has been agreed. — It is an assurance from a bank that a buyer is able to pay a seller. The seller doesnt expect to have to draw on the letter of credit to get paid.
  • 16. TYPES OF LETTER OF CREDIT¢ Revolving LC — The revolving credit is used for regular shipments of the same commodity to the same importer. It can revolve in relation to time or value. If the credit is Mrs. Charu Rastogi, Asst. Prof. time revolving once utilised it is re-instated for further regular shipments until the credit is fully drawn. If the credit revolves in relation to value once utilised and paid the value can be reinstated for further drawings. — Revolving letters of credit are useful to avoid the need for repetitious arrangements for opening or amending letters of credit.¢ Back to Back LC — A back-to-back letter of credit can be used as an alternative to the transferable letter of credit. Rather than transferring the original letter of credit to the supplier, once the letter of credit is received by the exporter from the opening bank, that letter of credit is used as security to establish a second letter of credit drawn on the exporter in favour of his importer. — Many banks are reluctant to issue back-to-back letters of credit due to the level of risk to which they are exposed, whereas a transferable credit will not expose them to higher risk than under the original credit.
  • 17. POSSIBLE QUESTIONS¢ Explain all the modes of payment used in international business. Discuss various types of L/Cs.¢ Write short notes on: Mrs. Charu Rastogi, Asst. Prof. ¢ Balance of payment vs. balance of trade ¢ Asian Development Bank ¢ Balance of payment ¢ Types of Letter of Credit¢ Explain the role played by ‘International Monetary Fund’, ‘Asian Development Bank’ and World Bank in promotion of International Trade¢ Explain the functions of International Monetary Fund.¢ What are various methods of payment in International Trade?¢ Discuss the role of World Bank in International Financial Management.
  • 18. Mrs. Charu Rastogi, Asst. Prof.
Popular Articles

Posted by at No comments:
Labels:
Subscribe to: Posts (Atom)