Final answer:
The document that specifies payment details in trade financing is the sales contract or commercial invoice, which is integral for managing cash flow and minimizing risk for the exporter-seller.
Step-by-step explanation:
In a discussion of trade financing, the document that specifies how much and by what means an exporter-seller wants to be paid is known as the sales contract or the commercial invoice. This document outlines the agreed-upon terms between the exporter and importer, including payment method, currency, amounts, and credit terms. Payment terms may vary, from advance payment to open account terms, where the exporter offers credit to the importer. The choice of payment terms can significantly impact the cash flow and risk exposure of the export transaction.
In international trade, minimizing risk is crucial for both the exporter and the importer. To mitigate risks such as exchange rate fluctuations, traders may use financial instruments like forward contracts to lock in current exchange rates, safeguarding against potential trade imbalances and unpredictable inflows or outflows of financial capital.