Unit 7 Terms of Payment
I. Introduction
The payment plays a very important role in business. The final result of all business activity should be to recover the value of goods supplied or rvices rendered. If payment is not ensured then all will be meaningless. Both the exporter and importer face risks in an export transition becau there is always the possibility that the other party may not fulfill the contract.
For exporters there is the risk that buyers defaults; the customers might not pay in full for the goods. There are veral reasons for this: the importers might go bankrupt; a war might ban importers of certain commodities. Another possibility is that the importer might run into difficulties getting the foreign exchange to pay for the goods. It is even possible that the importers are not reliable and simply refu to pay the agreed amount of money.
nagisaFor the importers there is risk that the goods will be delayed and they might only receive th
em after paying them. This may caud by port congestion or strikes. Delays in fulfillment of orders by exporters and difficult customs clearance in the importing country can cau loss of business. There is also a risk that the wrong goods might be nt.
cutie Payment in foreign trade is complicated and ttlement for foreign accounts may be made in a number of ways. The method of payment for each transaction is to be agreed upon between the two trading parties at the time of placing an order. The most often adopted method of payment in our foreign trade is payment by L/C,
Terms of payment means way or method of making payment. The methods we u in payment in the clearing of international trade are remittance, collection and the letter of credit (L/C).
Remittance is classified into 3 kinds: 1)Mail transfer (M/T) 2)Telegraphic transfer (T/T) 3)Demand draft (D/D) The buyer buys a draft from a local bank and nds it by mail to the ller, the ller or his appointed person can collect money from the relative bank at his end against the draft nt by the buyer.
南昌会计
pictureboxSometimes, the importer requests payment to be made by collection through banks under the terms of documents against payment (D/P) or documents against acceptance (D/A). In this ca, the banks will only do the rvice of collecting and remitting and will not be liable for non-payment of the importer. D/P calls for actual payment against transfer of shipping documents. There are D/P at sight and D/P after sight. The former requires immediate payment by the importer to get hold of the documents. In the latter condition, the importer is given a certain period to make payment as 30, 45, 60 or 90 days after prentation of the documents, but he is not allowed to get hold of the documents until he pays. D/A calls for delivery of documents against acceptance of the draft drawn by the exporter. D/A is always after sight.
L/C is ud in cas where the exporter wishes to avoid the risk, and it involves a guarantee of the bank opening the L/C. An L/C is a document issued by a bank (issuing bank) stating its commitment to pay the ller a stated amount of money on behalf of the buyer as long as the ller meets very specific terms and conditions. There are many types of L/C, such as Documentarty L/C, Irrevocable L/C, Revocable L/C, Transferable L/
26个英文字母大小写的规范书写C, Sight L/C, Time L/C, Confirmed L/C, Unconfirmed L/C. Parties concerned to a documentary credit are: the applicant, the issuing bank, the advising bank, negotiating bank, the paying bank, confirming bank and the beneficiary.
The letters of payment of payment in international trade may discuss which terms of payment of OK for both parties, accept or decline a method of payment, urge to open the relevant L/C or ask for amendment to the L/C.
II. Study of sample letters
Letter 1 Payment on D/P terms
Dear Mr. Baker, Thank you for your order of May 10. As requested, we have arranged to ship the electric hair dryers by S.S. Fenghua, leaving Shanghai on May 20. As the urgency of your order left us no time to make usual inquiries about the payment, we have to place this transaction on a cash basis and have drawn on you through the Bank of China for the amount of the enclod invoice. The bank will instruct its correspondent in Melbourne to pass the bill of lading to you against payment of the draft. When you have en our products, we are sure that you will find them satisfactory. We hope that your prent order will order will be the first of many to follow in the near future. Yours sincerely, Wang Mei Wang Mei翻译软件免费下载 Sales Manager | coordination
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Letter 2 Payment on D/A terms
