外贸函电UNIT EIGHT Payment by L C.ppt

Lesson Eight Payment by L/C Main Points Kinds of International Payment Procedure of Issuing L/C Tasks Assignment Kinds of International Payment I. Remittance: A: Mail Transfer B: Telegraphic Transfer C: Banker’s Demand Draft 2. Collection A: D/P B: D/A 3. L/C 1. Remittance Definition of Remittance The payer (usually the buyer ) remits a certain sum of money in accordance with the parties’ agreement to the payee (usually the seller) through a bank. Payer may remit the sum in one of the following manners: M/T, T/T or D/D. This method of payment is often used for down payment, payment of commission and samples, settlement of claims or as performance bond. 2. Collection Categories D/P: Documents will not be released to the importer until payment is effected. D/P can be divided into D/P at sight D/P after sight D/A: Documents are handed over to the importer upon his acceptance of the draft drawn by the exporter. Payment will not be made until a later date. D/A is always after sight. Comparison between D/P after sight D/A Both D/P after sight and D/A belong to usance payment, but as to D/A the importer can obtain the documents as soon as he accepts the draft, while in the case of D/P after sight, documents are not released to him until he actually pays for the merchandise. In this case the importer is given a certain period of credit. In reality, he can borrow the documents from the collecting bank based on his special relations with the bank. Therefore, on exporter’s part, D/P at sight is more favorable than D/P after sight, and D/P is more favorable than D/A. Payment by Collection should be accepted with discretion and is usually used when ■ the financial standing of the importer is sound. ■ the exporter wishes to push the sale of his goods. ■ the transaction involves only a small quantities.  Features  Application in the text L1: The importer (Cathy Business) applies to the opening bank (Federal Commercia