Unit 8 Terms of PaymentPPT精选文档

1、 Learning Objectives Understand the main modes of payment in international trade; Negotiate terms of payment; Write a letter asking for L/C amendments. Remember that credit is money. An American statesmanBenjamin FranklinSpeaking TaskStarting Up 1Listening Task23Reading Task 5Writing TaskFollow-up P

2、ractice64543216Contents8.1 Starting Up8.1 Starting Up 8.1.1 Work in pairs to work out as many factors as you can that need to be considered in negotiating payments for export sales. For example: the importers past and present business relationship with the exporter the importers past payment history

3、 and perceived credit worthiness Modes of PaymentM/T L/CT/TD/PD/AD/D8.1.2. The terms of payment are an important part of the sales contract. When considering payment, we need to understand different modes of payment used in international trade. Now store the words and phrases that are associated wit

4、h modes of payment and then explain or describe these terms.?1) What are the differences in payment between domestic trade and foreign trade?2) What are the main contradictions that exist between sellers and buyers in international payment?3) What are both sellers and buyers concerned about in negot

5、iating payment? 4) What are the commonly used methods of payment in international trade? Can you tell the advantages and disadvantages of each for both sellers and buyers?8.1.3 Discuss the following questions in pairs or small groups. The _of payment are an important part of the _From the _ point of

6、 view, the best terms would be full payment in _ at the time of sale，while the buyers would prefer to have the goods before making _Importers and exporters are separated from each other by thousands of milesThis adds to the difficulties of coming to _ on how _should be madeThe exporters and importer

7、s usually meet each other _and agree to payment by _opened by a _bankA letter of credit is a _guarantee that payment will be made on presentation of all the required_. In this way，the sellers or exporters receive a _not only from the buyers or importers, but also from _that payment will be made on _

8、of the goodsOn the other hand, the buyers or importers are given the _that the banker will not make payment unless the _ are presentedtermssales contractsellerscashpaymentan agreement payment half way letter of credit reliablebankers shipping documentsguarantee a banker deliveryguarantee shipping do

9、cuments Introductory Remarks7Main Modes of Payment in International Trade I. Remittance A. Mail Transfer (M/T) B. Telegraphic Transfer( T/T) C. Demand Draft (D/D) II. Collection A. Clean Bill for Collection B. Documentary Bill for Collection 1. Document against Payment (D/P) (1) D/P at sight (2) D/P

10、 after sight D/P T/R 2. Document against Acceptance III. Letter of Credit (L/C)Basic Payment Methods: Risk Spectrum Highest Risk to ExportersHighest Risk to ImportersLeast Risk to ImportersLeast Risk to ExportersOpen AccountDocumentary Collection D/A D/PDocumentary Credit Time L/C / Unconfirmed Sigh

11、t L/C / ConfirmedPayment in Advance 9Understanding Letters of CreditDo you know that 50% of L/C documents presented to banks are rejected? This costs you dearly, in extra bank charges, your wasted time and the customer dissatisfaction. Key ContentsvWhat is a letter of credit? vLearn the differences

12、between different types of L/Cs and when to use them. vDiscover which are the most usual types of L/C - Sight, Deferred Payment, Transferable, Standby. 1011 After the sales contract has been established between the exporter and importer, agreeing to settle the payment by L/C, the applicant (the impo

13、rter) applies to their bank for a letter of credit in favor of the exporter (beneficiary) The issuing bank (opening bank) issues an L/C and forwards it to the advising bank in the exporters country. The advising bank passes the documentary credit to the beneficiary after verifying the genuineness of

14、 the credit. On receiving the L/C, the exporter checks the terms and conditions of the credit based on the sales contract. If there is a discrepancy, the beneficiary may have the option to accept it as it stands or to ask the applicant to have it amended so as to be in line with the contract. The ex

15、porter prepares the documentation as per the terms and conditions of the L/C, and have the goods shipped. The exporter then presents the documents to the negotiating bank for the negotiation of the draft. After receiving the documents, the negotiating bank will check the documents against the terms

16、and conditions of the L/C. If all are in order, the above bank will effect payment to the beneficiary. 12 The negotiating bank forwards the documents to the paying bank or the bank authorized by the issuing bank to ask for reimbursement. The paying bank, after receiving the documents from the negoti

17、ating bank, will examine them carefully to see whether the documents are in compliance with the terms of the L/C. If the documents conform to the L/C, the paying bank will reimburse the negotiating bank which has paid the beneficiary. The issuing bank will notify the importer of the arrival of the d

18、ocuments and ask him to pay the bank for the documents. The importer will pay money to the bank and get the documents with which he can claim the merchandise 13Different Types of Letters of Creditv1. According to the attaching of documents 1) Clean credit 2) Documentary creditv2. According to the re

19、vocability of credit 1) Revocable credit 2) Irrevocable creditv3. According to the transferability of credit 1) Transferable credit 2) Non-transferable creditv4. According to the adding of confirmation 1) Confirmed credit 2) Unconfirmed creditv5. According to the time of payment 1) Sight credit 2) U

20、sance or time creditv6. According to the method of payment 1) Payment credit 2) Deferred payment credit 3) Acceptance credit 4) Negotiation credit v7. According to the credit amount to be used revolvingly 1) Automatic 2) Semi-automatic 3) Non-automatic v8. Other credits 1) Red clause credit 2) Back

21、to back credit 3) Reciprocal credit 4) Standby credit 14Identify the following letters of credit 1. _is a credit available by deferred payment, under which payment must be effected on a specified future date. 2. _is one with a clause inserted into the credit authorizing the negotiating bank to make

22、an advance of the amount under the credit, whole or part, to the beneficiary. 3. _The beneficiary is entitled to ask the bank to transfer L/C rights partially or wholly to a third party. This is used for direct financing of supplies, where the selling party is not the direct producer but is an inter

23、mediary. 4. _The underlying L/C amount is renewed during the life of the L/C according to pre-defined terms and conditions. It is advantageous for contracts with repeated goods deliveries. Revolving L/C Transferable L/C Clean L/C Sight L/C Deferred L/C Irrevocable L/CRed clause L/C Confirmed L/CDefe

24、rred L/C Red Clause L/C Transferable L/C Revolving L/C （ 循环信用证循环信用证） （可转让信用证）（可转让信用证） （光票信用证）（光票信用证） （即期信用证）（即期信用证）（延期信用证）（延期信用证）（不可撤销的信用证）不可撤销的信用证）（红条款信用证）（红条款信用证） （保兑信用证）（保兑信用证）15v5. _is a credit under which payment will be effected only against a draft without any shipping documents attached ther

25、eto or sometimes, against a draft with an invoice alone attached thereto.v6. _is a credit that constitutes a definite undertaking of the issuing bank and can be amended or cancelled by the issuing bank only on condition that all parties concerned. v7. _is a credit that is advised to the beneficiary

26、with another banks confirmation added thereto.v8. _calls for the presentation of sight drafts, under which the beneficiary (the drawer) is entitled to receive payment at once on presentation of his draft to the drawee bank or to the issuing bank if drawn on the issuing, once the relevant documents h

27、ave been checked and found to be in order. Clean L/C Irrevocable L/C Confirmed L/C Sight L/C16Advantages & Disadvantages of a Letter of Credit vAdvantages to the Exporter Shifts credit risk from the Importer to the Importers Bank (Issuing Bank). An undertaking from the Issuing Bank that payment will

28、 be made under the Letter of Credit, provided that you meet all terms and conditions of the Letter of Credit. If the Letter of Credit is not issued as agreed, you are not obligated to ship against it. vDisadvantages to the Exporter Documents must be prepared in strict compliance with the requirement

29、s stipulated in the Letter of Credit. Non-compliance leaves you exposed to risk of non-payment and removes the protection afforded by the Issuing Bank since the final decision on the documents then rests with the Importer. 17Advantages and Disadvantages of Documentary CollectionvThe major advantage

30、of a cash against documents payment method for the Buyer is the low cost, versus opening a Letter of Credit. The advantage for the Seller is that he can receive full payment prior to releasing control of the documents, although this is offset by the risk that the Buyer will, for some reason, reject

31、the documents (or they will not be in order). Since the cargo would already be loaded (to generate the documents), the Seller has little recourse against the Buyer in case of non-payment. A payment against documents arrangement involves a high level of trust between the Seller and the Buyer and shou

32、ld be adopted only by parties well known to each other. 18Risks in Documentary CollectionsvFor the Exporter If it is a sight draft, the exporter will reduce the risk of non-payment but will not eliminate it totally since the importer may not be in a position to pay for the goods or may not be able t

33、o procure sufficient foreign exchange to make the payment. In this case the exporter may be forced to either call back the goods or negotiate sale to some other interested party, which may be at a reduced rate. In the case of term draft, the risk to the exporter is higher since the foreign buyer wil

34、l take possession of the goods and may not pay at due date, forcing therefore the exporter to try and collect payment from the foreign buyer in the foreign buyers home country. vFor the Importer The importer faces the risk of paying for goods of sub-standard quality or even with shortages. In such a

35、 circumstance, it would take some time to get refunds from the exporter. It could also happen that the exporter refuses to make refunds, leading the importer to lengthy legal proceedings. 19When to use Documentary Collections? Since Documentary Collections transactions entail some measure of trust,

36、it is advisable to use the mechanism when the following conditions apply: When the exporter and importer have a well established relationship When there is little or no threat of a total loss resulting from the buyers inability or refusal to pay When the foreign political and economic situation is s

37、table When a letter of credit is too expensive or not allowed In this part you will listen to a passage and two conversations about terms of payment. Try to finish the exercises while listening. Are you ready?8.2 Listening Task 8.2.1 Listen to the conversation about the modes of international paymen

38、ts and fill in the tree according to what you hear in the dialogue. Modes of International PaymentremittancecollectionLetter of credit M/T T/T D/D D/A D/P Sight L/C Time L/CIrrevocable L/C Revolving L/C8.2.2 Listen to the conversation and complete the following table with the information you hear. C

39、DBBD8.2.3 Listen to the conversation about the terms of payment and fill in the chart below with the information you get from the recording.Mr. GreenMiss WangPositions of paymentReasons for insistence or refusalConcessionsAdded requirementsD/P or D/AConfirmed & irrevocable L/Chaving to pay a margin,

40、 bank charges and tax expensesaccept L/C paymentMay consider D/P after more business togetherThe goods should be delivered one month before Christmas season startsThe L/C should reach the seller one month before shipment 1. What does Mr. Chen Hai do? 2. What does the Malaysian company intend to do?

41、3. What payment terms does the Malaysian company insist on? 4. Why does Mr. Chen go to the bank? 5. Can the bank provide the service Mr. Chen asks for? 6. How much should Mr. Chen pay for the service? 7. What does Mr. Chen get from the bank? 8.What information does Mr. Chen get about the Malaysian c

42、ompany? 04.12Listen to a dialogue and answer the following questions.补充听力补充听力1. He is a manager of the China National Electronics Imp. & Exp. Corp. South China Branch.2. To import a large amount of Sleep Helper from Chens company.3. Time L/C.4. To make an investigation of the financial position of t

43、he Malaysian Trading Company.5. Yes.6. RMB￥ 898 in total. RMB￥ 200 in advance.7. The result of the investigation of the financial standing of the Malaysian company.8.The Malaysian company is an importer and wholesaler of electrical machinery and equipment, having a business background of some twenty

44、 years. It is doing well at the present. It is one of the fastest growing wholesale dealers in Bangkok handling many types of electrical products for local clients. It has capital about USD 750000 at this point.Answers:1. We may accept deferred payment if the quantity is over 3000.2. Since we have s

45、ettled the price and quantity, shall we discuss the question of payment terms.3. Payment by letter of credit is our usual practice.4. We allow you a payment terms of 15 days, but wish to draw your attention to our attractive discount for immediate payment.5. When should we open the L/C if we want th

46、e goods delivered before June?6. Their balance sheets of recent years will show you that their import business in oil products has been managed and operated under a satisfactory condition.7. Opening an L/C means an additional cost to our imports;8. The L/C must reach us not later than April 28 and r

47、emain valid fifteen days after the date of shipment.9. The goods are ready for shipment. Please open the L/C immediately.10.Our terms of payment are by irrevocable L/C payable by sight draft against presentation of shipping documents Dictation: (14.57)补充听力补充听力In this part you are going to read three

48、 dialogues and then you will be asked to answer some questions about what you have read.Please read louder!8.3 Speaking Task 8.3.1 Conversation 1Having settled the price of the transaction, Mr. Green from America is discussing with Mr. Zhao about terms of payment.1）What is Mr. Zhaos usual terms of p

49、ayment with his customers? Answer: 2）What payment terms did Mr. Green propose?Answer: 3）Did Mr. Zhao agree to accept Mr. Greens payment terms? What did he say?Answer: 4）What was Mr. Greens proposed number of days after sight or term documentary credit?Answer: 5） What was Mr. Greens explanation?Answe

50、r: 6）What payment terms did Mr. Zhao accept in the end?Answer:Confirmed, irrevocable letter of credit against presentation of sight draft.D/A against presentation of time draft or term documentary credit.No. He said their capital would be tied up for several months after they effected shipment. 90 d

51、ays.Because of the size of this order, they might not be able to make full payment till the end of the fiscal year. The current economic downturns in the U.S. and other existing factors had drained their cash flow to the limit. He made a concession by accepting D/P at sight for half the total paymen

52、t, and deferred payment credit at 90 days for the remaining balance 8.3.2 Conversation 2Having settled the problems of price, quality and quantity, Mr. Stone and Mr. Zhou are continuing their talk about the terms of payment.1）What is the mode of payment usually accepted by Mr. Zhou? Answer: 2）Why do

53、es Mr. Stone say that paying by L/C is really troublesome and costs a lot ?Answer: 3）Why does Mr. Zhou insist on payment by confirmed irrevocable L/C? Answer: 4）How does Mr. Zhou usually pay for imports from Mr. Stones country?Answer: 5）What does Mr. Stone mean by saying “Lets meet each other half w

54、ay”?Answer: 6）What is the mode of payment finally agreed by both parties?Answer: Confirmed, irrevocable letter of credit payable against shipping documents. When opening a letter of credit with a bank, they have to pay a large sum of money as a deposit. That will tie up their capital. Because a conf

55、irmed, irrevocable letter of credit allows exporters the additional protection of the bankers guarantee. The same kind of letter of credit as he requires of Mr. Stone. 50% by L/C and the balance by D/P L/C at 60 days sight 8.3.3 Conversation 3After they have reached an agreement on the terms of paym

56、ent, Mr. White and Mr. Zhang are talking about when the covering L/C should be opened.1）When does Mr. Zhang think generally the L/C should be opened by the buyer?Answer: 2）Why does Mr. White think it adds to his financial difficulties if following Mr. Zhangs requirement to open the L/C?Answer: 3）Wha

57、t is Mr. Whites proposal as to when to open the L/C?Answer: 4）Why does Mr. Zhang refuse the above proposal? Answer: 5）How do they agree on the validity of the L/C?Answer: 6） What documents will be provided by Mr. Zhang?Answer: Generally, 30 days before delivery so that the seller can make the necess

58、ary arrangements. Because to open the L/C 30 days before the month of shipment practically means Mr. White cannot get back my deposit until after three or four months. Thatll tie up his capital in the bank for too long and he simply couldnt afford it. To open the L/C 15 or 20 days before the month o

59、f shipmentBecause 15 or 20 days wont do. Getting the goods ready, booking the shipping space and what not, all these take time .The L/C expires 15 days after the 30-day duration is due. A complete set of bills of lading, a commercial invoice, an export license, an insurance policy, a certificate of

60、origin and certificate of inspection.In this part you are going to read a passage and then you will be asked to answer some questions about what you have read.8.4 Reading TaskPre-reading questions for pair work 1) Which method of payment would you choose for international transactions? Why?2) What k