A disadvantage for companies that insist on less risky transactions,such as a letter of credit,is that they may be losing business to competitors who sell on open accounts.

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Exporters that insist on less risky payment terms, such as a letter of credit, may find that they are losing business to competitors who do sell on open account. Well-known global firms such as Mercedes-Benz do not accept the extra cost of obtaining letters of credit and give their business to suppliers that will offer them open-account terms.

A Disadvantage for Companies That Insist on Less Risky Transactions,such