From the 1990s on, trade payment terms has been rapidly changing from L/C-based payment terms to those of remittance payment. Since 1999, in particular, remittance payment terms has been more frequently adopted than L/C-based payment terms in exports ...
From the 1990s on, trade payment terms has been rapidly changing from L/C-based payment terms to those of remittance payment. Since 1999, in particular, remittance payment terms has been more frequently adopted than L/C-based payment terms in exports contracts. This study, addressing such changes, intends to analyze what the factors are that have generated those rapid changes in trade payment terms since 1997.
The study specifically takes it into account that payment terms are significantly influenced by the size of firms, trade market as well as item structures. It is from this aspect of payment terms that the computation by the SAS package is executed on the Korea trade statistics data base. Based on the causes for the changes derived from the computation, further survey of trading firms has been conducted by means of questionnaires and phone interviews.
The analysis shows that the changes in trade payment terms have resulted from the increases in direct contracts between the trading parties, increased contracts with overseas branches instead of overseas trading firms, increases in new products including telecommunication appliances and the growing numbers of small-and-medium trading firms.