Chapter7 International payment

1、Chapter SevenInternational PaymentThe basic methods of payment in international trade Payment in advance Remittance T/T By cash Collection L/CDocuments against payment D/P at sight D/P after sightexporterRemitting bank(exporters bank)importerCollecting bank(importers bank)(1)Sign contract (2)applica

2、tion/draft at sight(3)draft, a set of documents(4)Presentation for paymentProcedure of D/P at sight(5)Payment against transfer of shipping documents(6)transfer(7)paymentBills of Exchange Definition of Bill of Exchange A bill of exchange, also called draft, is defined as “ an unconditional order in w

3、riting, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand, or at a fixed or determinable future time, a sum certain in money, to the order of a specified person, or to bearer”.The operation process of draft To draw Prese

4、ntation Acceptance Payment Endorsement Dishonor RecourseTo draw出票 To draw is to fill up by the drawer the particulars in a bill of exchange the date of drawing, the name of the drawee, the time and amount of the payment, etc. The draft is signed by the drawer and then sent to the payee There are thr

5、ee kinds of ways to fill up the payee:Restrictive payee, such as payCo. only, pay Co. not transferable.To order, such as To order or Pay to the order of Co. This type requires endorsement when transferable.To bear, such as To bearer. This type requires no endorsement.Presentation提示 The act of taking

6、 the bill to the drawee and demanding that he makes the payment or accepts the bill is known as presentation. For a sight bill, payment should be made at the same time when the presentation is made, and for a tile bill, the drawee is required to accept the bill when the bill is presented to him.Acce

7、ptance承兑 The formal act whereby the drawee adopts the bill as his own obligation is known as acceptance. Acceptance is the written signification by the drawee of his assent to the order of the drawer. This is accomplished in the regular manner by writing the word “Acceptance”, with the date and the

8、signature of the drawee, across the face of the bill. When the bill is accepted by the drawee, he is then known as an acceptor.Payment付款 Under a sight bill, the drawee is required to make the payment when the bill is presented to him while for a time bill, the drawee is required to accept the bill w

9、hen the bill is presented to him and make the payment at the maturity of the bill. When paid, the bill is retained by the payer while the receipt is made and signed by the holder of the bill.Endorsement背书 The bill of exchange is negotiable and transferable as the payee on most bill is to “to the ord

10、er of”. Negotiation and transfer is effected with endorsement. If the payee on the bill is to “to the bearer”, then negotiation and transfer is done with mere delivery of the bill. Endorsement is done when the payee has signed his name on the back of the bill with or without additional words conveyi

11、ng instructions or qualifying liability. There are three main endorsements, namely special, blank and restrictive.Restrictive endorsement The endorser may write clearly on the upper part of the signature on the back of the bill the endorsee with restrictive conditions. A restrictive endorsement is o

12、ne which limits the bill for further negotiation, such as “Payonly” or “Paynon-transfer”. Once the bill is restrictively endorsed, it cannot be transferred any more.Blank endorsement A blank endorsement, or endorsement in blank, is one which specifies no payee. The effect of a blank endorsement is t

13、o make the bill payable to bearer and to make delivery and without additional endorsement.The role of draft in foreign trade To be a useful means of settlement To provide written evidence of a debt which can be used on a court of law To enable the exporter to obtain immediate payment, by presentatio

14、n if it is a sight bill, or by negotiation if it is a time bill To enable the importer to delay payment until the maturity of the billClassification of bill of exchange Clean Bill and Documentary Bill Sight bill (or Demand/Tenor) and Time Bill (or Usance/Term) Bank Bill and Trade BillSome terminolog

15、ies Drawee: the person to whom the order is addressed and who is to pay the money. He is usually the importer or the appointed bank under a letter of credit in import and export trade. In addition, when a time bill has been accepted by the drawee, he becomes an acceptor who is the same person as the

16、 drawee. The drawer and acceptor must be different persons.Payee: the person (individual, firm, corporation, or bank) to whom the payment is ordered to be made.The drawer and payee may be often the same person. In this case, the bill may be worded “ Pay to our order ”.The payee is usually exporter h

17、imself or his appointed bank in import and export trade.Acceptance of draft It means that the drawee writes the word “Accepted” and signs his name with date on the face of the draft, then strokes two straight lines above and under.sight The drawee sees the draft when it is presented.To tender (or su

18、rrender) the shipping documents The collecting bank or the holder of the shipping documents hands over them to the drawee.To honor the draft on presentation Also called “ to retire the shipping documents”. The drawee makes payment when the draft comes due, then he gets the shipping documents.To refu

19、se payment, or to dishonor The drawee refuses to discharge a draft when it falls due for payment.汇票汇票：Drawn UnderL/C NO. DatePayable with interest %per annumExchange forAtSight of this first of exchangePay to the order of The sum ofTo Shanghai,ChinaBill of exchangeNO.汇票样本汇票样本Collection Collection me

20、ans the handling by banks, on instructions received, of documents (financial documents and/or commercial documents), in order to : a. obtain acceptance and/or, as the case may be, payment, or b. deliver commercial documents against acceptance and/or, as the case my be against payment, or c. deliver

21、documents on other terms and conditions.Two types of collection Clean collection Documentary collection Documentary collection falls into two kinds: documents against payment (D/P) documents against acceptance (D/A)委托人委托人（出口人）（出口人）托收行托收行（出口地银行）（出口地银行）付款人付款人（进口人）（进口人）代收行代收行（进口地银行）（进口地银行）（1 1）订合同）订合同

22、（2 2）申请书、）申请书、 即期跟单汇票即期跟单汇票（3 3）委托书、汇票）委托书、汇票 、 全套单据全套单据（4 4）提示付款）提示付款即期付款交单即期付款交单 流流 程程 简简 图图（5 5）付款交单）付款交单（6 6）转账）转账（7 7）货款）货款委托人委托人（出口人）（出口人）托收行托收行（出口地银行）（出口地银行）付款人付款人（进口人）（进口人）代收行代收行（进口地银行）（进口地银行）（1 1）订合同）订合同 （2 2）申请书、）申请书、 远期跟单汇票远期跟单汇票（3 3）委托书、汇票）委托书、汇票 、 全套单据全套单据（4 4）提示承兑）提示承兑承承 兑兑 交单交单 流流 程程

23、简简 图图（5 5）承兑交单）承兑交单（7 7）转账）转账（8 8）货款）货款（6 6）提示付款）提示付款Documentary credit Definition of L/C: see Page 121 in the text. The relative parties to L/C:*the opener (buyer, applicant)*the issuing bank (the opening bank, establishing bank)*the advising bank (notifying bank)*the drawer (seller, exporter)*the

24、drawee (buyer, importer)*the negotiating bank*the reimbursing bank*the beneficiary(三三) 收付程序收付程序:开证人开证人(进口人进口人)受益人受益人(出口人出口人)付款行开证行付款行开证行(1)(2)通知行议付行通知行议付行(4)(5)(3)(6)(7)1. 订立合同订立合同3. 开证开证2. 申请开证申请开证4. 通知通知5. 交货交货取单取单、议付议付6. 索偿、偿付索偿、偿付7. 付款赎单付款赎单即期不可撤销跟单议付信用证程序图即期不可撤销跟单议付信用证程序图跳一页跳一页Types of L/C Docu

25、mentary L/C and Clean L/C Sight L/C and Time or Usance L/C Irrevocable L/C and Revocable L/C Confirmed L/C and Unconfirmed L/C Transferable L/C and Divisible L/C Revolving L/C Back to back L/C Red clause L/C Standby L/CL/C specimen：40A: form of documentary credit IRREVOCABLE:20: documentary credit n

26、umber764351:31C: date of issue 12TH AUG. 2005:31D: date of expiry 30TH SEP.2005 Place of expiry CHINA:51A: applicant bank HONGKONG AND SHANGHAI BANKCORP :50: applicant KINGHOME TRADE CO.,LTD 23567DOMINGGO RD. COWCITY CAUSA TEL:467 897623:59: beneficiary SHANGHAI DACHANGHANG CO.,LTD 18/F INGMAO BUILI

27、NG NO.88 XUJIAHU RD SHANGHAI TEL86 21 88821903:32B: currency code, amount USD6200.00:41D: available. With by ANY BANK FOR NEGOTIATION:42C: draftsat SIGHT:43P: partial shipment allowed:43T: transshipment allowed:44: loading on board SHANGH:44B: for transportation to ROTTERDAM:44C: latest date on ship

28、ment 20TH.SEP.2005:45A: description of goods and/or services GLASS CANDLEHDLADER ITEM NO.025 100PCS Packed IN 8 CTNS:46A: documents required IN THREEFOLD UNLESS OTHERWSE SPECIED: SIGNED COMERCIAL INVOICE 3 FOLD INSURANCE POLICY OR CERTIFICATE,ENDORSED IN BLANK,COVERING ALL RISKS AND WAR RISK FULL SE

29、T CLEAN ON BOARD BILL(S) OF LADING MADE OUT OUR ORDER AND ENDORSED IN BLANK, MARKED FREIGHT PREPAID AND NOTFYING APPLICANT PACKING LIST:47A: additional conditions SHORT FORM A BLANK BACK B/L IS NOT ACCEPTABLE:71B: charges ALL BANKING CHARGES OUTSIDE THE OPENING BANK ARE FOR BENEFICALARYS ACCOUNT:48:

30、 period for presentation ALL DOCUMENT S MUST BE PRESENTED WITHIN 10 DAYS AFTER DATE OF ISSUANCE OF THE B/L, BUT WITHIN THE VALIDITY OF THIS L/C :49: confirmation instruction; WITHOUT Attention should be paid to the following when using L/C An L/C must bear a valid period which may be longer than the

31、 shipping period, but the shipping date should not be later than the validity date of the credit. If validity is not stated in the credit, the validity of credit shall be determined according to the shipping date. The description of commodities in the commercial invoice must correspond with that in

32、the credit. In all other documents, the goods may be described in general terms, not inconsistent with that of the goods in the credit.continued The words “about”, “approximately”, “circa” or similar expression used in connection with the amount of the credit, or the quantity, or the unit price stated in the credit are to be construed as allowing a difference not to exceed 10% more or less than the amount, q