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1、Chapter 5 专业PPT/商演示设计制作 Payment Methods - Letter of CreditReview Question 1 Question 1 : : Whats the meaning of collection Question 2 :Question 2 : Types of collection (D/P&D/A)?Question 3 :Question 3 : Procedures under D/P at sight ?Question 4 :Question 4 : Risks under collection (export & importer
2、)?Why we need the method of L/C ? Inter-look of the four methods of payment in I.S - Payment in advance - Open account - Collection - Letter of creditWhat is a letter of creditA L/c is a written undertaking by the issuing bank to the beneficiary, under which the bank will pay a sum certain in money
3、to the beneficiary if the beneficiary of the L/C provides the bank with specified documents within a prescribed time period, which all comply with the terms and conditions of the credit.What is a letter of creditCharacteristics of a letter of credit - A written undertaking on the part of the issuing
4、 bank - Independent of the sales contract - Exclusively dealing with documents Uniform Customs and Practices for Documentary Credit - UCP600 is the governing rule concerning documentary credit - any issued L/C should indicate clearly that the said L/C is subject to the uniform customs and practice f
5、or documentary creditsContents of a L/C Type of the Credit -Irrevocable Revocable Credit Number -It will tie up all the relevant documents Place and Date of Issue -Place（where the issuing bank is located） -Date（when the L/C is issued） Date and Place of Expiry -A definite date，not a periodContents of
6、 a L/C Amount of the credit and Its currency -If the amount is preceded by about, approximately or circa, the credit will allow 10% tolerance -Be indicated in the ISO Currency Code Available with _bank by_ - which bank will effect the payment - how the payment will be effected Partial Shipment - all
7、owed or not allowed Transshipment - allowed or not allowedContents of a L/C Insurance -Depending on the price term Port of shipment and Port of Discharge - The last date for shipment after the phrase: no later than/last on Description of goods - It should be made in a general term Stipulate Document
8、s - Commercial invoice、Transport documents、 Insurance Documents，Certificate of origin Certificate of inspection、Packing listContents of a L/C Presentation Period - After the date of shipment but within the validity of the credit, the stipulated time can be 14 or 21 Instructions to the Advising Bank
9、- Without adding your confirmation, with adding your confirmation, adding your confirmation if requested by the beneficiary Bank to bank Instructions Number of pages、 The signature of the issuing bankParties to a L/C Applicant/buyer - Liable for payment to the issuing bank provided no discrepancy be
10、tween documents and the credit; - right to examine the documents and refuse payment; - any requirement of the applicant should be satisfied by certain documents and clearly indicated when making credit application Issuing application form Issuing bank/the buyers bank - By issuing a credit the issuin
11、g bank undertakes full responsibility for paymentParties to a L/C Beneficiary/seller - The right to examine a credit upon receipt of it according to the sales contract; - whether be paid or not solely depends on the fulfillment of terms and conditions of the credit. Advising bank - Accurately transm
12、it the terms of credit and check the apparent authenticity of the credit Reimbursing bank - A bank named in credit from which the paying bank, accepting bank or negotiating bank may request cover after paying or negotiating the documents. the reimbursing bank shall not examine the documentsParties t
13、o a L/CClaim-ing bank Confirming bank Undertake the same obligations assumed by the issuing bank; Responsible for a credit independently and pay without recourse Negotiating bank In a negotiation credit, purchases the drafts and documents; When dishonored by the issuing bank, it has the right of rec
14、ourse to the beneficiary; Obtain the reimbursement from the issuing bank Paying/accepting bank Designated by issuing bank to effect payment or acceptance in most cases to be the advising bank; Once it has made payment to the beneficiary, it will lose the right of recourse to the beneficiary; Entitle
15、d to obtain reimbursement from the issuing bankProcedures of a L/CSeller/beneficiaryBuyer/applicantAdvising bankdesignated bankIssuing bankShipping company1)contract2)application and cash deposits3)opens a L/C4)advise L/c5)examine and prepare documents6)payment5)8)examine documents and ask the buyer
16、 to redeem 9)pick up goodsProcedures of a L/C1、Sales contract between importer and exporter2、Importer makes the application form 3、Issuing bank exam the creditworthiness, pass L/C to the exporters bank4、Exporters bank pass L/C to the beneficiary5、Accept L/C or applicant to have it amended, prepared
17、other docs and present to the right bank6、Check documents7、Forward docs to reimbursing bank or issuing bank8、Make reimbursement9、Issuing bank notify the importer10、Docs are released to the import against his paymentApplication and Amendment of L/C It is a contract between the applicant and the issui
18、ng bankDocumentary Credit Application form Any discrepancies between the L/C and sales contract may lead to the amendment of the credit Application for Amendment to Letter of creditTypes of a L/C According to the Attachment of Commercial Docs - Clean Credit: Payment will be effected only against a d
19、raft without any commercial docs attached - Documentary Credit: Payment will be made against title docs either with a draft or not According to the Revocability of a credit - Irrevocable Credit: it cannot be cancelled or modified without the express consent from the issuing bank, the confirming bank
20、 and beneficiary. It gives the beneficiary greater assurance of payment - Revocable Credit: it can be cancelled or modified at any moment without the beneficiarys consent or even without prior notice to the beneficiary.It involves risks to the beneficiaryTypes of a L/C According to the adding of con
21、firmation - Confirmed irrevocable credit: gives the beneficiary a double assurance of payment. Used when the seller does not have confidence that the issuing bank can effectively guarantee payment . - Silent confirmation: Based on a separate arrangement between the beneficiary and the “confirming” b
22、ank. The bank will not be considered the confirming bank by the issuing bank and acquiring no right of claiming reimbursement from the issuing bank. According to the Availability of payment - Irrevocable documentary sight payment credit - Irrevocable documentary deferred payment credit - Irrevocable
23、 documentary acceptance payment credit - Irrevocable documentary negotiation payment creditTypes of a L/C According to the time of credit Availability - Sight or Demand credit . - Time or usance credit Transferable L/C - A credit under which the beneficiary (first beneficiary) may request the bank a
24、uthorized to pay, incur a deferred payment undertaking, accept or negotiate (the “transferring bank”), or in the case of a freely negotiable credit, the bank specifically authorised in the credit as a transferring bank, to make the credit available in whole or in part to one or more other beneficiar
25、y (second beneficiary) Types of a L/C Back to Back L/C - The beneficiary of an irrevocable credit (primary credit) may use the credit as security to open a separate credit (back-to-back credit /subsidiary credit)Original beneficiary/new applicantBuyer/Original applicantIssuing bankAdvising bankReal
26、supplierNew beneficiaryIssuing bankAdvising bankBuyer/Original applicantIssuing bankAdvising bank /transferring bankFirst beneficiaryManufacturerReal supplierPreview Compare Compare the three the three main main methods methods under under internationainternational l settlement?settlement?Analysis the Analysis the risks risks associated associated with with exporters exporters And And importer?importer?Thank You
