1. Relatively speaking, the risks from high to low are: remittance, collection, and letter of credit.

2. For the seller, the letter of credit method is the method with the smallest risk of collecting foreign exchange.

The foreign exchange collection risk of collection is greater than that of letter of credit settlement, and is generally only used by old customers with long-term cooperative relationships and good credit.

The risk of remittance is relatively high.

3. Both remittance and collection belong to commercial credit, and letters of credit belong to bank credit. Among the three settlement methods, only remittance is a forward remittance, while collection and letter of credit are both reverse remittance. Both remittances and collections are commercial credit and carry higher risks, while letters of credit are bank credit and have higher reliability. In international trade, especially in China, letters of credit are basically used as settlement methods. However, opening a letter of credit generally requires a deposit and the cost is relatively high.

Extended information:

1. Remittance (Remittance), also known as remittance, is a settlement method in which the payer entrusts the bank of the country to pay the money to the payee in some way. . When remittance is used in international trade, the buyer usually pays the loan to the payee through the bank in accordance with the conditions and time stipulated in the contract.

Bill remittance is a type of remittance. Although banks are involved, the banks only provide services but do not provide credit. The bank charges lower handling fees and is less secure;

2 Collection (Collection) means that after the goods are shipped, the exporter issues a bill of exchange with the importer as the payee (with or without shipping documents), and entrusts the bank at the place of export to use its branch or agency bank at the place of import. A settlement method that collects payment for goods on behalf of the importer.

Collection is a situation in which the exporter entrusts a bank to collect payment on its behalf. The bank is still not responsible for providing credit and charges higher fees. If the document of acceptance is selected during collection, the risk is the greatest for the seller.

3. Letter of credit (letter of credit) is a written voucher issued by the bank to the exporter at the request of the importer to guarantee payment of the payment. A letter of credit is a credit provided by a bank. The bank is only responsible for reviewing the documents and not the goods. That is, as long as the seller submits documents that comply with the provisions of the letter of credit, the seller can obtain the payment. The risk is minimal for the seller and the bank handling fee is the highest.

4. Under normal circumstances, collection can be used for small balances after trade. If the amount is large, it is best not to use it. It is very unsafe.

Remittances are divided into letter transfers (M/T), wire transfers (T/T) and draft transfers (D/D). Wire transfers are faster and more expensive, but lower than letters of credit. The security is not bad. It is generally transferred using SWIFT between banks. However, mail transfers take a long time, and draft transfers are prone to the possibility of the notes being lost in the mail.