《国际贸易实务与操作》Chapter 6.pptVIP

国际贸易实务与操作  International Trade Practice and Operation Chapter 6 International Payment Teaching Objectives 1. Identify the risks of different methods of payment in international trade. 2. Discuss the form and function of bill of exchange, check, and promissory note. 3. Explain the procedures of documentary collection. 4. State the types of letter of credit and the procedures of payment. 5. Outline different parties’ responsibilities under the letter of credit payment. Section 1 Payment Options There are four basic methods of payment: payment in advance, documentary (letter of) credit, documentary collections, open account. Section 1 Payment Options 1. Payment in Advance The buyer simply prepays the seller prior to shipment of the goods． It provides the seller with the most security but leaves the buyer at great risk. Cash in advance is usually a wire transfer or a check. Section 1 Payment Options Remittance is an act of transmitting money, bills, or the like, to a distant place, as in satisfaction of a demand, or in discharge of an obligation. There are three types of remittance: Mail Transfer (M/T), (2) Telegraph Transfer (T/T), (3) Demand Draft (D/D) . Four parties are involved in the remittance process: the remitter, the payee, the remitting bank and the paying bank. Section 1 Payment Options 2. Documentary (Letter of) Credit A letter of credit is a bank’s commitment to pay the seller a specified sum on behalf of the buyer under precisely defined conditions． Letters of credit are the most common form of international payment because they provide a high degree of protection for both the buyer and the seller. Section 1 Payment Options 3. Documentary Collections A documentary collection is similar to an international cash on delivery (COD). The seller ships goods to the buyer but sends the documents, including the bill of lading (title document), through the banks with instructions to release them to the buyer only upon payment. When the buyer obtain