1. International Payments
Chapter Seven
International Payments

2. Learning objectives After learning this chapter you will be able to:
identify the key issues in handling international payments
understand the use of paying instruments, especially the bill of exchange
define the three basic terms of payment
compare and contrast the characteristics of terms of payment
identify the major parties involved in different payment methods
state the stages involved in using a letter of credit
explain the variations of documentary credit
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3. 7.2 Remittance Definition
After conclusion of a business transaction, the debtor instructs his bank to send (remit) the transaction amount to his creditor in export country. It is the debtor who takes initiative to send the payable amount to his creditor.
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4. Type of Remittance Payment Order 进口商将 货款交付 进口商往 来银行委托 出口地 银行 出口商
Banker’s demand draft
进口商向
本地银行
购买汇票
后寄交
出口商将
汇票交付
出口地
银行托收
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5. Types of remittance Three types of remittance Mail transfer (M/T) 信汇
by mail
lower charges, but slow
Telegraphic transfer (T/T) 电汇
by telecommunication system (telex or telegraph or swift).
Faster, safer, but more expensive
Banker’s Demand Draft (D/D) 票汇
Imp. buys a check from a bank in imp. country and sends to the exp.
Lowest charge, slowest
Transferable
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6. 7.2.1 Remittance The party involved in remittance remitter(汇款人)
remitting bank(汇出行)
receiving bank(汇入行)
payer (收款人)
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7. Procedure of remittance
remitter
payer
买卖合同规定以电/信汇付款
1 电/信 汇申请
书、交款、付费
3汇 款 通 知
4 收 据
5 付 款 *
(Telegraphic Transfer, T/T）
（Mail Transfer, M/T）
2 电/信汇委托通知 *
Receiving
bank
Remitter
bank
6 收回垫款或付讫借记通知
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8. 7.3 Collection 托收 Definition
an arrangement whereby the seller draws a draft on the buyer and authorizes its bank to collect.
A means of payment ensuring that the goods are handed over to the buyer only when he pays the amount shown on a bill or when he accepts the bill and commits to pay by a specified date.
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9. 7.3.1 Collection 托收 Parties involved Drawer / exporter/principal 委托人
Drawee / importer / payer 付款人
Remitting bank（托收行）in exporting country
Collecting bank （代收行）in the importing country
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10. Types of Collection Documentary Collection
Documents against Payment (D/P) 付款交单
the collecting bank releases the documents to the importer only upon full and immediate cash payment.
Documents against Acceptance (D/A) 承兑交单
If a period of credit to the importer is agreed upon, a usance bill will be used
The documents will be released against acceptance by the importer.
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11. Procedure of Documentary Collection
Drawer
(seller)
Remitting
bank
(drawer ’
s bank)
Drawee
(buyer)
Collecting (
drawee s
bank)
1. Contract
2. Goods
3. Application +
Documents +
Draft
4. Advice of terms of collection + documents + draft
5. Advise of
collection
9. Payment
8. Payment
6. Payment/
Acceptance
7. Documents
released
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12. Remittance in contract clause
The Buyers shall pay the total value to the Sellers in advance by T/T（M/T or D/D）not later than
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13. Remittance in contract clause
20% of the total contract value as advance payment shall be remitted by the Buyer to the Seller through telegraphic transfer within one month after signing this contract.
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14. Collection in contract clause
Upon first presentation the Buyers
shall pay against documentary draft
drawn by the Sellers at sight . The
shipping documents are to be delivered
against payment only.
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15. Collection in contract clause
The Buyers shall duly accept the documentary draft drawn by the Sellers at ...days sight upon first presentation and make payment on its maturity. The shipping documents are to be delivered against payment only.
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16. Collection in contract clause
The Buyers shall duly accept the documentary draft drawn by the Sellers at ... days sight upon first presentation and make payment on its maturity. The shipping documents are to be delivered against acceptance.
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