1. PAYMENT TERMS ADVANCE PAYMENTS OPEN ACCOUNT TRADE
DOCUMENTARY COLLECTIONS
DOCUMENTARY LETTERS OF CREDIT

2. EXPORT TRADE PARTIES OFFSHORE FOREIGN FOREIGN BANK IMPORTER PAYMENT
RECEIVES PAYMENT
FACILITATES PAYMENT
SOUTH AFRICA
PAYMENT
ECREIVES PAYMENT
FACILITATES PAYMENT
SOUTH
AFRICAN
EXPORTER
COMMERCIAL RISK
LOCAL
BANK

3. ADVANCE PAYMENTS SELLER HAS BOTH GOODS AND MONEY
ABSOLUTE TRUST BY BUYER THAT SELLER WILL DELIVER THE CORRECT GOODS
EXCHANGE CONTROL IN BUYER’S COUNTRY MUST PERMIT ADVANCE PAYMENTS - MANY DON’T
BUYER MUST BE FINANCIALLY SOUND
COUNTRY RISK OF BUYER’S COUNTRY
BUYER CAN OBTAIN CASH DISCOUNTS

4. OPEN ACCOUNT TRADE BUYER HAS BOTH GOODS AND MONEY
ABSOLUTE TRUST BY SELLER THAT BUYER CAN AND WILL PAY AT THE AGREED TIME
BUYER’S COUNTRY WILL NOT IMPOSE REGULATIONS DEFERRING OR BLOCKING TRANSFER OF FUNDS
BUYER MUST BE FINANCIALLY SOUND
COUNTRY RISK OF BUYER’S COUNTRY
SELLER HAS SUFFICIENT LIQUIDITY

5. DOCUMENTARY COLLECTION DEFINITION
A DOCUMENTARY COLLECTION IS THE COLLECTION, THROUGH A BANK, OF A SUM OWNED BY A BUYER, AGAINST DELIVERY OF DOCUMENTS

6. PARTIES TO A DOCUMENTARY COLLECTION
DRAWER
(EXPORTER)
REMITTING BANK
(SUPPLIER’S BANK)
CONTRACT OF
SALE
COLLECTING BANK
DRAWEE
(IMPORTER)

7. DOCUMENTARY COLLECTIONS METHOD OF OPERATION
TWO BASIC FORMS
- DOCUMENTS AGAINST ACCEPTANCE (D/A)
- DOCUMENTS AGAINST PAYMENT (D/P)
EXPORTER HANDS ALL DOCUMENTS TO THE BANK
BANK ACTS AS INTERMEDIARY BETWEEN EXPORTER AND IMPORTER
BANKS CONTROL THE RELEASE OF DOCUMENTS AS PER INSTRUCTIONS FROM THE EXPORTER
THE BANK DOES NOT ASSUME ANY RESPONSIBILITY IF THE IMPORTER IS UNWILLING OR UNABLE TO MEET HIS PAYMENT OBLIGATIONS

8. DOCUMENTARY COLLECTIONS ADVANTAGES
SIMPLE AND INEXPENSIVE HANDLING
OFTEN QUICKER PAYMENT COMPARED TO OPEN ACCOUNT
TITLE TO THE GOODS CONTROLLED VIA A BANK,

9. DOCUMENTARY COLLECTIONS REASONS FOR BILLS BEING DISHONOURED
DRAWEE IN PRISON FOR MURDER
DRAWEE HAS GONE TO THE RACES, HOPES TO PAY TOMORROW
WILL PAY WHEN SEEDS GERMINATE
DRAWEE HAS BEEN DECLARED BANKRUPT AND THE LIQUIDATOR HAS BEEN PUT IN PRISON FOR HOMICIDE

10. DEFINITION OF A LETTER OF CREDIT
A DOCUMENTARY CREDIT REPRESENTS A COMMITMENT OF A BANK TO PAY THE SELLER OF GOODS OR SERVICES A CERTAIN AMOUNT PROVIDED HE CONFORMS WITH THE SPECIFIED TERMS AND CONDITIONS WITHIN A PRESCRIBED PERIOD OF TIME

11. PARTIES TO A DOCUMENTARY CREDIT
APPLICANT
ISSUING BANK
CONTRACT OF
SALE
ADVISING BANK
CONFIRMING BANK
BENEFICIARY

12. DOCUMENTARY CREDITS BASIC FORMS
REVOCABLE CREDITS
IRREVOCABLE, UNCONFIRMED CREDITS
IRREVOCABLE, CONFIRMED CREDITS

13. DOCUMENTARY CREDITS REVOCABLE
CAN BE AMENDED OR CANCELLED WITHOUT BENEFICIARY’S CONSENT
MAY NOT BE REVOKED IF PAYMENT HAS BEEN MADE OR IF DOCUMENTS HAVE BEEN TAKEN UP
IF NOT CLEARLY MARKED REVOCABLE, IT IS DEEMED TO BE IRREVOCABLE

14. DOCUMENTARY CREDITS IRREVOCABLE, CONFIRMED
IF THE CONFIRMING BANK IS A FIRST RATE BANK IN BENEFICIARY’S COUNTRY, THEN NO SOVEREIGN RISK
BENEFICIARY MAY RELY SOLELY ON THE BANK WHICH HAS ADDED ITS CONFIRMATION
BENEFICIARY CAN DEAL WITH A BANK IN ITS OWN COUNTRY
AVAILABLE WITH CONFIRMING BANK
PROCEEDS CAN BE DISCOUNTED

15. DOCUMENTARY CREDITS TYPES ACCORDING TO PAYMENT METHODS
SIGHT CREDIT
ACCEPTANCE CREDIT
DEFERRED PAYMENT CREDIT
NEGOTIATION CREDIT
ADVANCE PAYMENT CREDIT
REVOLVING CREDIT

16. DOCUMENTARY CREDITS TYPES ACCORDING TO PAYMENT METHODS
SIGHT CREDIT
- PROCEEDS PAID UPON PRESENTATION AND
EXAMINATION OF DOCUMENTS
- UCP ALLOWS BANKS 7 DAYS TO EXAMINE
- SIGHT CAN MEAN FEW DAYS DEFERRED PAYMENT
ACCEPTANCE CREDIT
- USANCE DRAFT DRAWN ON ISSUING OR ON
NOMINATED BANK ( 90 DAYS FROM SHIPMENT )
- ACCEPTED DRAFTS CAN BE DISCOUNTED
- BEWARE OF ACCEPTANCE CHARGES

17. DOCUMENTARY CREDITS TYPES ACCORDING TO PAYMENT METHODS
DEFERRED PAYMENT CREDIT
- NO ACCEPTANCE OF DRAFTS
- PAYABLE AT A DETERMINABLE FUTURE DATE
- PROCEEDS CAN ONLY BE DISCOUNTED WITH THE
ISSUING OR NOMINATED BANK
- FINANCING INSTRUMENT FOR THE BUYER
NEGOTIATION CREDIT
- SIGHT/USANCE WITH THE ISSUING BANK
- USUALLY DELAYS IN PAYMENT

18. DOCUMENTARY CREDITS BEFORE THE CREDIT IS ISSUED
DECIDE ON THE FORM OF THE CREDIT DURING SALES NEGOTIATION
THE SELLER OBTAINS THE BEST GUARANTEE OF PAYMENT WHEN THE CREDIT IS CONFIRMED BY A BANK IN HIS OWN COUNTRY

19. DOCUMENTARY CREDITS SALES CONTRACT ?
AMOUNT AND CURRENCY
TOLERANCE IN AMOUNT AND QUANTITY
PLACE OF AVAILABILITY
CONFIRMATION REQUIRED ? BY WHOM ?
MUST THE CREDIT BE TRANSFERABLE ?
EXPIRY DATE, LATEST SHIPMENT DATE, PERIOD FOR
PRESENTATION OF DOCUMENTS
PAYMENT TERMS (SIGHT OR USANCE)
PARTIAL/ TRANSHIPMENTS ALLOWED ?
DELIVERY TERMS (INCITERMS)
PORT OF SHIPMENT AND DISCHARGE
WHICH CREDIT COSTS ARE TO BE BORNE BY WHOM
THE NOMINATED BANK FOR NEGOTIATION AND/OR CONFIRMATION

20. HOW TO HANDLE DISCREPANT DOCUMENTS
RETURN DOCUMENTS TO BENEFICIARY FOR CORRECTION
- REPRESENTATION MUST BE WITHIN PRESENTATION
PERIOD ALLOWED UNDER CREDIT
- SOME DISCREPANCIES CANNOT BE CORRECTED
TELEX TO ISSUING BANK FOR AUTHORITY TO PAY
SEND DOCUMENTS ON COLLECTION
RETURN DOCUMENTS TO EXPORTER WITHOUT PAYMENT
PAY WITH RECOURSE TO THE BENEFICIARY

21. TRANSPORT DOCUMENTS AIR WAYBILL PARCEL POST RECEIPT
COMBINED TRANSPORT BILL OF LADING
RAIL CONSIGNMENT NOTE
ROAD WAYBILL
BILL OF LADING
HOUSE BILL OF LADING

22. COMMERCIAL DOCUMENTS PROFORMA/COMMERCIAL INVOICE CERTIFIED INVOICE
WEIGHT NOTE
PACKING LIST
SPECIFICATION
INSPECTION CERTIFICATE
ANALYSIS CERTIFICATE

23. COMMON DISCRPEPANCIES
CREDIT EXPIRED
LATE SHIPMENT
LATE PRESENTATION
DESCRIPTION OF GOODS ON INVOICE DIFFER FROM THE CREDIT
DOCUMENTS NOT ENDORSED CORRECTLY
INSURANCE DOCUMENTS INCORRECT
ABSENCE OF SIGNATURES, ESPECIALLY TO AMENDMENTS ON
DOCUMENTS
SHORT SHIPMENT
MARKS AND NUMBERS DIFFER BETWEEN DOCUMENTS
CARRIER/AGENT/MASTER
PORT OF LOADING AND DESTINATION
COMMERCIAL INVOICE (TAX)
CLEAN ON BOARD NOTATION