Final answer:
The most secure/reliable export financing payment methods in descending order are: documentary collection (draft) → documentary credit (L/C) → cash in advance → sales on open account.
Step-by-step explanation:
- Documentary credit (L/C): This method involves a bank guaranteeing payment to the exporter upon presentation of certain documents.
- Documentary collection (draft): This method requires the exporter to send the shipping documents to their bank, which then forwards them to the importer’s bank for payment.
- Cash in advance: In this method, the importer pays the exporter in full before the goods are shipped.
- Sales on open account: This method allows the importer to receive the goods and make payment at a later date, with no specific financial instrument involved.
Therefore, the correct arrangement is 3) documentary collection (draft) → documentary credit (L/C) → cash in advance → sales on open account.
The question is asking to arrange different export financing payment methods based on their security and reliability from the most secure to the least. The correct arrangement is option 4) cash in advance → documentary credit (L/C) → documentary collection (draft) → sales on open account. This order reflects the level of security and reliability for the exporter, with cash in advance being the most secure as it involves receiving payment before the goods are shipped, and sales on open account being the least secure as it involves shipping the goods before payment is received, relying on the buyer's promise to pay.