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INTERNATIONAL PAYMENT TERMS

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by

Clement L

on 22 August 2014

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Transcript of INTERNATIONAL PAYMENT TERMS

INTERNATIONAL
PAYMENT TERMS

GENERAL RISKS
IN
INTERNATIONAL TRADE

ECONOMIC RISKS
COMMERCIAL RISKS
LEGAL RISKS
TRANSIT RISKS
CULTURAL RISKS
???
POLITICAL RISKS
PAYMENT TERMS
OPEN INVOICE
DOCUMENTARY
COLLECTION

LETTER
OF CREDIT

THE OPEN INVOICE PROCESS
BUYER
SELLER
PLACES THE ORDER
SHIPS GOODS
SENDS A COMMERCIAL INVOICE
BUYER
SELLER
BUYER
ADVISES PAYMENT
BANK OF BUYER
INVESTMENT BANK FOR NICE PEOPLE
BANK OF SELLER
RELEASES PAYMENT
SELLER
TRANSFERS THE MONEY
ADVANTAGES
FOR SELLER & FOR BUYER
SIMPLE
CHEAP
TIME SAVING
THE DOCUMENTARY COLLECTION PROCESS
BUYER
SELLER
PLACES AN ORDER
SHIPS THE GOODS
BUYER
SELLER
RECEIVES THE
BILL OF LADING
SELLER
SENDS DOCUMENTS WITH INSTRUCTIONS FOR OBTAINING PAYMENT
BANK OF SELLER
INVESTMENT BANK FOR NICE PEOPLE
+
INSTRUCTIONS
BANK OF BUYER
FORWARDS DOCUMENTS WITH INSTRUCTIONS
BUYER
PAYMENT
RELEASES DOCUMENTS ON RECEIPT OF PAYMENT
BUYER
DOCUMENTS
GOODS
BANK OF BUYER
BANK OF SELLER
PAYMENT
SELLER
TRANSFERS MONEY
ADVANTAGES FOR
SELLER & BUYER
CONSIDERABLE PAYMENT WARRANTY AND GOODS DELIVERY
СЩЫЫФВА
ЫВАЫВАЫВ
COSTS
RATIOS
THE BUYER MAY NOT ACCEPT DOCUMENTS
THE BUYER'S COUNTRY MAY BLOCK THE GOODS
DIFFICULTIES TO RESHIP THE GOODS BACK
FOR SELLER
BUYER
SELLER
BUYER
SELLER
BUYER
SELLER
THE LETTER OF CREDIT PROCESS
BUYER
SELLER
PLACES THE ORDER
BUYER
REQUESTS L/C
BANK OF BUYER
INVESTMENT BANK
FOR NICE PEOPLE
BANK OF SELLER
ISSUES LETTER OF CREDIT
L/C
SHIPS THE GOODS
BUYER
SELLER
SENDS DOCUMENTS
SELLER
BANK OF BUYER
BANK OF SELLER
FORWARDS DOCUMENTS
BUYER
BANK OF BUYER
COOL INVESTMENT BANK FOR NICE PEOPLE
FORWARDS DOCUMENTS
SELLER
TRANSFERS THE MONEY
BUYER
DOCUMENTS
FORWARDER
GOODS
DISADVANTAGES
SELLER
BUYER
GUARANTEES THAT THE SUPPLIER WILL BE PAID ONLY IF ALL TERMS AND CONDITIONS OF THE L/C HAVE BEEN MET
DETAILED AND ACCEPTED INTERNATIONAL STANDARDS
IMPACT ON LIQUIDITY
INFERIOR QUALITY OR LESSER QUANTITY OF GOODS
ADVANTAGES
SELLER
BUYER
DOCUMENTS HAVE TO MEET THE L/C CONDITIONS
THE BUYER MAY REFUSE THE PAYMENT IF THERE IS ANY DISCREPANCY WITH THE COMPLIANCE OF THE DOCUMENTS
GUARANTEE OF PAYMENT
HIGH COSTS
INFLUENCE OF
INCOTERMS ON PAYMENT
SELLER
LOADING
CARRIER
CARGO TERMINAL
PORT
BUYER
TRANSPORT
PORT
CARGO TERMINAL
CARRIER
CUSTOM
EXW
FOB
DDP
OPEN INVOICE
DOCUMENTARY
COLLECTION
LETTER OF CREDIT
RISK & COSTS
RISK & COSTS
RISK & COSTS
L/C
D/C
O/I
65%
25%
10%
TIPS FOR PURCHASER
SELLER
BUYER
FORWARDER
FORWARDER
DOCUMENTS ARE CHECKED BY THE BANK
OK
WRONG
+
INSTRUCTIONS
COULD BE FORWARDED OR SOLD
FOR SALE
L/C
L/C
HIGH COSTS
CASH
SELLER
STANDARDIZED PROCESS
(ORDER VOLUME)
OPEN INVOICE
IF POSSIBLE
CORRECT WORDING
ORIGINAL DOCUMENTS ONLY
TERM SHEETS AS BASIS
DO'S
DONT'S
D/P at sight
CAD
D/P 30d, CAD 30d
D/A 30 d
Open Invoice
TT, SWIFT
L/C 90 d
(after sight)
L/C 90d
(after B/L date)
PAYMENT
WHAT SHOULDN'T
HAPPEN?
THE SELLER IS NOT SECURED
DISADVANTAGES AND RISKS
BUYER
DISADVANTAGES
AND RISKS
FOR BUYER
BUYER
SELLER
LESS QUANTITY
LOW QUALITY
WRONG PRODUCT
2nd CHECK
FEEDBACK
POSSIBILITY FOR FINANCING
HIGH WORKLOAD
90 d IF POSSIBLE
DOCUMENTS ARE TOO LATE OR INCOMPLETE
DIFFERENT UNDERSTANDING OF TERMS ON BOTH SIDES
WRONG MATURITY DATES
SAMPLES ON COMMERCIAL INVOICE
OPEN INVOICE
DOCUMENTARY COLLECTION
LETTER OF CREDIT
MISSING/WRONG BILL OF EXCHANGE
ADDRESSED TO THE BANK
SHIPMENT MODE CHANGES DO NOT AFFECT PAYMENT TERM
WRONG MATURITY DATES
DOCUMENTS ARE TOO LATE OR INCOMPLETE
SAMPLES ON COMMERCIAL INVOICE
PROFORMA INVOICE IS TOO LATE
THE SELLER DISAGREES WITH THE CONDITIONS OF L/C AFTER IT IS ISSUED
DOCUMENTS ARE TOO LATE OR INCOMPLETE
SAMPLES ON COMMERCIAL INVOICE
WITHOUT DEFERRED PAYMENT
DOCUMENTS AGAINST PAYMENT "
D/P at sight
"

WITH DEFERRED PAYMENT
DOCUMENTS AGAINST ACCEPTANCE "
D/A 30,60,90 d
"
BUYER
BUYER
SELLER
SENDS A PROFORMA INVOICE
PROFORMA
INVOICE
QUESTIONS?
THANK YOU FOR YOUR ATTENTION !
Full transcript