ZIMSEC O Level Commerce Notes: Money and Banking: Bank Payments in Home and Internation Trade
Bank payments in Home Trade
- Payments encountered in home trade are made via the following bank services:
Standing or stop order
- Is a method of payment used to pay fixed amounts to creditor at specified times during the month or year e.g. Hire Purchase and DSTV subscription payments.
- An arrangement is made between the customer and the bank.
- The debtor and creditor must agree and complete the banker’s stop order form.
- The system avoids the occurrence of bad debts and delayed payments.
- It reduces paper work.
- Saves on the cost of posting cash or sending and processing cheques.
- It is the debtor who initiates payment.
- Is a method of payment.
- It is used to pay many accounts using one cheque.
- A multiple transfer form is filled.
- The payee must have a banking account.
- It is ideal for making several payments at the same time.
- Payment is made to any of the banks in that country.
- Is the used to pay dividends or wages.
- Is a method of payment initiated by the creditor.
- Direct debit authorisation form is filled to settle bills for example water bill, contract cell phone bills, internet bills etc.
- It is used to make payments of varying amounts.
- Payments are prompt.
- It minimises bad debts.
- The creditor does not need to send reminders to customers.
Payments by banks in foreign trade
- The following methods are used:
- Bank overdraft.
- Bill of Exchange.
- Letter of credit or documentary credits.
- Cable transfer e.g. Homelink.
- These will be explained fully in International Trade.
To access more topics go to the Commerce Notes page.