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Using a foreign exchange online portal in lieu of commercial letters of credit for small businesses in the international import arena
Cooley, John W.
Cooley, John W.
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n09285.pdf
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Abstract
Businesses understand the competitive advantages that can be obtained by participation in and utilization of global markets. Decreases in costs along the value chain, enhancements and expansion of product lines and the resulting market expansion in U.S. domestic markets as a result of import activities are well known for larger companies. But, can a small business function successfully in a similar environment? This paper discusses the possibility of small businesses functioning successfully in the international import market without the use of commercial letters of credit, banks as controlling intermediaries and with a large amount of autonomy with regards to the flow of foreign currency and contracts. Specifically, this paper examines the commercial letter of credit and contrasts it with the use of a foreign exchange online portal by small business. The paper shows how the online portal can be used to circumvent some of the compliance and financial problems associated with the commercial letter of credit and in lieu of commercial letters of credit for small business purchases.
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2010-05
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With permission of the license/copyright holder