There are three payment methods commonly used in foreign trade:
1. Letter of Credit (L/C), which has many types;
2. Remittance Payment mainly includes three types: Telegraphic Transfer (T/T), Mail Transfer (M/T) and Demand Draft (D/D).
3. Collection, mainly including Documents against Payment (D/P) and Documents against Acceptance (D/A).
D/P is Document against Payment. After we ship the goods, we prepare our negotiation documents and present the documents to the customer's bank through our bank. The customer's bank prompts the customer that the document has arrived. After the customer pays, the bank Deliver orders.
D/A is a document against acceptance, which is also presented to the customer's bank through our bank. The difference is that the customer only needs to accept our documents, and can take away the original documents and pay after maturity. .
T/T is a wire transfer (the documents are usually mailed directly to the customer by us without going through the bank). If we use T/T payment method with the customer, the general practice is that the customer must first give us 30 The method of advance payment and general insurance of the remaining 70 is that after the goods are loaded on the ship, the customer pays with the original bill of lading faxed by us. After the payment is received, the complete set of original documents will be mailed to the customer.
Collection payment D/P, D/A
D/A D/A, write-off tax refund, the difference between logistics and freight forwarding D/P and D/A is, D/ P must pay for the bill, pay first and then submit the bill of lading. If the bank releases the bill privately, the responsibility lies with the bank; D/A importer can collect the bill of lading after accepting the bill XX days after paying the bill. If the payment is overdue, the bank is not responsible.
D/P Documents against payment is a method of delivering documents under the documentary collection method. It means that the exporter’s presentation of documents is conditional on the importer’s payment, that is, the importer Only after payment has been made can the receipt be collected from the collecting bank. It is divided into documents at sight (D/P Sight), which means that the exporter issues a sight draft and the collecting bank presents it to the importer. The importer must pay after seeing the draft. When the payment is paid, the importer obtains the shipping documents.
D/P after sight or after date means that the exporter issues a usance draft and the collecting bank presents it to the importer. After the importer accepts it, the bill will be issued on the expiry date. Or the importer must pay the redemption order before the bill of exchange expires.
D/A Documents against Acceptance is a method in which the exporter (or collecting bank) delivers documents to the importer on the condition of acceptance under the documentary collection method.
The so-called "acceptance" refers to the act of recognition of the draft by the payee (importer) when the collecting bank presents the usance draft. The acceptance procedure is for the payee to sign the bill of exchange, annotate the word "acceptance" and the date, and return the bill to the holder. Regardless of how many times the bill has been transferred, the payee must pay against the bill on the maturity date. 6T)V y.p5A c9D)E
The above can be done except for D/P Sight. Others are more risky (compared to L/C), but there are also If a customer does not pay the redemption order due to market price and other issues, he can only be an old customer with a good reputation and long-term relationship.
D/P Documents against payment is a method of delivering documents under the documentary collection method. It means that the exporter’s presentation of documents is conditional on the importer’s payment, that is, the importer Only after payment has been made can the receipt be collected from the collecting bank.
D/P at Sight means that the exporter issues a sight draft and the collecting bank presents it to the importer. The importer must pay after seeing the draft. When the payment is paid in full , the importer obtains the shipping documents.
D/P after sight or after date means that the exporter issues a usance draft and the collecting bank presents it to the importer. After the importer accepts it, the bill will be issued on the expiry date. Or the importer must pay the redemption order before the bill of exchange expires.
D/A Documents against Acceptance is a method in which the exporter (or collecting bank) delivers documents to the importer on the condition of acceptance under the documentary collection method.
The so-called "acceptance" refers to the act of recognition of the draft by the payee (importer) when the collecting bank presents the usance draft. The acceptance procedure is for the payee to sign the bill of exchange, annotate the word "acceptance" and the date, and return the bill to the holder. Regardless of how many times the bill has been transferred, the payee must pay against the bill on the maturity date.
In addition to D/P at Sight, the above options are more risky (compared to L/C), but there are also cases where customers do not want to do it due to market prices and other issues. If you want to make a payment redemption order, you can only do it with old customers with good reputation and long-term relationship.
D/P payment (i.e., document against payment), D/A payment (i.e., document against acceptance) and other payment methods are rarely used. Mainly because these two payment methods belong to commercial credit, that is, whether the export company can receive payment completely depends on the importer's credit. Whether the importer can receive the goods on time, quality and quantity also depends on the exporter's credit. For importers with good credit, there will generally be no non-payment of goods. When encountering importers with poor credit, default or refusal to pay for goods often occurs. Therefore, these two payment methods are mostly used by importers and exporters with good reputations.
D/P is very risky, but if combined with T/T, it can be regarded as a very good delivery method. Because some countries and companies like to use D/P. So for example, 30T/T in advance, 40 after shipment, the balance D/P. This is safer than doing post-T/T.
O/A: open account trade (o/a), the buyer and the seller agree that the seller will deliver the goods to the buyer first, and the buyer will pay within the agreed time. This is a payment method of trade credit, which completely depends on the credit of the buyer and the seller. It is mainly used for the payment of deposits, payment tails, commissions, fees, etc., and the risk of foreign exchange collection contained therein is very high. It is the riskiest among various settlement methods in terms of foreign exchange collection.
Telegraphic Transfer T/T payment
T/T (Telegraphic Transfer) means that the remittance bank will send a deposited telegram, telex or SWIFT to another person at the request of the remitter. A remittance method in which a branch or agency bank (i.e., the remittance bank) of a country instructs the payment of a certain amount to the payee.
(1) Under the T/T method, the importer does not need to pay a certain amount to the payee. When a bank applies to develop a letter of credit, all the procedures related to the letter of credit can be omitted.
(2) After completing customs declaration and other procedures, the exporter no longer delivers documents to the bank through "advertisement", but directly sends the documents to the importer on the "Document List" page. 0v s/y1L#ramp; c.Wamp; H
(3) The importer can go through the relevant procedures directly after receiving the documents, and can then pay the importer after selling the goods and recovering the funds.
(4) Only after the importer makes payment can the bank notify the exporter to settle the foreign exchange.
TT is a wire transfer, L/C is a letter of credit (revocable and irrevocable) and can also be divided into forward and near-term.
When doing TT, a certain percentage of deposit is usually paid first , such as 30. This can help companies have start-up funds for a project. But in the case of LC, the exchange collection is usually after the delivery. The documents from all parties have been obtained. After they are ready, go to the bank to submit the documents to press the exchange.
Telegraphic transfer is a remittance bank that responds to the remitter's request by sending a charged telegram or telex (Tested Cable/Telex) or by SWIFT to a foreign remittance bank, instructing it to pay a certain amount to the payee. A method of remittance settlement.
Telegraphic transfers use telegrams and telexes as settlement tools, which are safe, fast and relatively expensive. Since the transmission direction of telegrams and telexes is the same as the flow of funds, telegraphic transfers are smooth transfers.
Telegraphic transfer is a widely used remittance method at present. Its business process is as follows: the remitter first submits a wire transfer application and pays the payment to the remittance bank, and then the remittance bank charges a telegram or telex. To the remitting bank, the remitting bank gives the payee a wire transfer advice. After receiving the notification, the payee goes to the bank to cash it, and the bank makes the payment. After the payment is completed, the remitting bank issues a debit advice to the remitting bank, and at the same time, the remitting bank Give the remitter a receipt for the wire transfer.
When making a wire transfer, the remitter must fill out a remittance application form and indicate in the application that the T/T method of wire transfer will be used. At the same time, transfer the remitted amount and required fees and obtain a wire transfer receipt. After the remittance bank receives the remittance application, in order to prevent delays or unexpected losses of remitted funds due to errors in the application, the remittance bank should carefully review the application and contact the remitter in a timely manner if there is anything unclear.
When the remittance bank handles wire transfer, it will send payment instructions to the remittance bank by telegram or telex based on the contents of the remittance application. The contents of the message mainly include: remittance amount and currency, payee name, address or account number, remitter name, address, postscript, position allocation method, remittance bank name or SWIFT address, etc. In order for the remitting bank to confirm that the content of the message is indeed sent by the remitting bank, the remitting bank must add the testkey agreed to be used by both banks before the text.
After receiving the telegram or telex, the remitting bank will check whether the secret key is consistent. If it does not match, it should immediately draft a message to the remitting bank to inquire. If they match, a wire transfer advice will be issued and the payee will be notified of the withdrawal. The payee presents the notice in duplicate to the remittance bank to withdraw money, and after signing the payee's receipt, the remittance bank can use it to pay the remittance. In practice, if the payee has an account with the remittance bank, the remittance bank often does not issue a remittance advice, but only deposits the money into the payee's account by telegram, and then gives the payee a collection notification, which is also The payee is not required to sign a receipt. Finally, the remitting bank sends the paid debit advice (Debit Advice) to the remitting bank.
The telegraph fee in wire transfers is borne by the remitter. Banks generally process wire transfers on the same day and do not occupy the remittance funds in the postal process. Therefore, for large-amount remittances or through SWIFT or inter-bank remittances, For planning, wire transfer is mostly used.
TT, although there is a certain risk, but the cost is low, and it is now very popular among the world's foreign trade payment methods.
There are several ways,
1. TT before 100, this method is rare, if your customer gives you 100 TT when placing an order, then you are lucky. This customer should be an old customer or the amount is relatively small to do this.
2. TT after 100, this has a certain risk. Unless it is a regular customer, otherwise we are too passive. We may lose money and goods at any time. Whether to pay or not depends entirely on the customer's credit.
TT (deposit) before 3.30, TT after 70, principal payment upon presentation of bill of lading, this is the most common.
Letter of Credit: Letter of Credit
Letter of Credit (Letter of Credit, referred to as L/C) is a letter of credit issued by the issuing bank to the beneficiary (exporter) based on the request and application of the applicant (importer) with a certain amount of money and a bill of exchange and export within a certain period. A document, a written guarantee that payment will be made at a specified place. A letter of credit is a payment commitment made by the issuing bank to the beneficiary, which gives the beneficiary the guarantee of payment, so it is a payment method that is beneficial to the beneficiary. However, the beneficiary can only receive payment when the documents required by the letter of credit are provided in accordance with the provisions of the letter of credit. Therefore, the letter of credit is a conditional payment commitment of the bank. Letters of credit are divided into two categories: clear letters of credit and documentary letters of credit.
A documentary letter of credit refers to a letter of credit with specified documents attached, and a letter of credit without any documents is called a clean letter of credit. Simply put, a letter of credit is a guarantee document that guarantees the exporter to recover the payment. Please note that the shipment period of export goods should be within the validity period of the L/C, and the L/C presentation period must be submitted no later than the validity date of the L/C.
The issuance of an external letter of credit generally requires the following steps:
(1) The buyer and seller sign a formal sales contract for the goods traded, and indicate the use of the goods in the contract Settlement by letter of credit;
(2) The importer fills in the application for issuance of a letter of credit in accordance with the provisions of the contract, submits it together with a copy of the contract and the "Import Payment Registration Form" (if necessary) to the designated local foreign exchange bank, and at the same time submits the credit The funds required for external payment under the letter of credit shall be deposited in the bank's margin account in full, and an application for issuance of external letter of credit shall be submitted to the bank;
(3) If only part of the deposit can be deposited, the insufficient part shall be You can apply to the bank for a standby loan; sign a standby loan contract with the bank;
(4) The issuing bank will issue a formal letter of credit based on the content of the application and transfer the credit to the appropriate foreign agent bank. Notify the original copy of the letter of credit to the exporter, and at the same time give a copy of the letter of credit to the importer;
(5) The bank charges a certain percentage of handling fees from the applicant for the issuance of the letter of credit based on the amount and term of the letter of credit.
Although letter of credit is a major payment method in international trade, it does not have a unified format. However, the main contents are basically the same, generally including:
1. Description of the letter of credit itself: type, nature, number, amount, issuance date, validity period and expiry location of the letter of credit, The name and address of the parties, whether the right to use this letter of credit can be transferred, etc.;
2. The drawer, payee, term and terms of the bill of exchange, etc.;
3. The name, quality, specification, quantity, packaging, transportation mark, unit price, etc. of the goods;
4. Requirements for transportation: shipping period, port of shipment, port of destination, mode of transportation, whether freight should be prepaid, and whether Partial shipment and mid-transshipment, etc.;
5. Requirements for documents: type, name, content and number of copies of documents, etc.;
6. Special terms: According to the politics of the importing country Different provisions may be made based on changes in economic and trade conditions or the needs of each specific business;
7. The issuing bank’s responsibility to guarantee payment to the beneficiary and bill holder
Bank guarantee letter L/G
Banker's letter of guarantee (abbreviated as L/G), also known as bank guarantee, bank guarantee, or simply guarantee, it refers to the letter of guarantee that the bank should entrust A written voucher issued to the beneficiary upon the person's application to ensure that the applicant performs the contract in accordance with the regulations, otherwise the bank will be responsible for repayment.
Foreign trade collections
Foreign trade collections are related to the normal operation of foreign trade transactions and the flexibility of foreign trade capital flows. Some foreign trade customers make the right choice, and the funds for foreign trade collection are very smooth; while for some, due to reasonable planning
, the payment for foreign trade transactions cannot be returned, which affects the turnover of their own funds. The pros and cons of various foreign trade payment collection methods are discussed in various sub-forums of major foreign trade forums. Here I just talk about it based on the experience of many of my customers
Talking about the small foreign trade collection platform Choose a method.
1. Identify the target customer group
The most important thing is to identify the current customer group and choose the right payment method. For example, some payease customers' foreign trade customers in the foreign trade industries such as clothing, watches, and jewelry are mainly concentrated in some countries in Europe, America, and the Middle East. These countries have relatively developed economies, and people's overall living standards are higher and their ideological awareness is higher. They are more avant-garde and easily accept new things, so they generally advocate a fast, convenient, efficient and fashionable lifestyle. At the same time, their countries have a relatively high number of credit cards issued. Almost everyone has an international credit card with the words VISA or Master.
When dealing with such a target customer group, you must choose a lifestyle that is conducive to them. For example, credit card foreign trade payment collection is a relatively popular payment method at present.
2. Check your own transaction amount
Generally speaking, if the foreign trade transaction amount exceeds 1,500 US dollars, then choose wire transfer T/T or letter of credit T/C
Water payment methods are more suitable; if your transaction amount is a few hundred dollars, credit card payment,
Paypal, Western Union, etc. are your ideal choices. Mainly due to the high cost of the letter of credit and the troublesome operation, it is not affordable for a simple foreign trade merchant, and the entire collection time is relatively long.
It is not conducive to shortening the payment time. At the same time, foreign customers or buyers generally will not spend a lot of time and financial resources just to pay a few hundred US dollars.
3. Choose a payment method that you are familiar with
Foreign trade payment collection is related to your own vital interests. If you take this step lightly, all your previous efforts will be wasted in the entire foreign trade transaction
process. Therefore, choose a collection method that you are familiar with to ensure that foreign trade collections can be returned in a timely and effective manner. On the FOB forum, we have seen that many people who are not familiar with Paypal foreign trade collections have many problems in
registration, cash withdrawal, unfreezing, etc., resulting in extended foreign trade collection times, and some even
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The situation of failure to receive foreign trade payment. The main reason for this is that PayPal has too many rules and regulations, so if anyone knows about it, it will feel like an expert.
When choosing a payment platform, we generally follow the principle of "easy to operate, easy to collect, low cost
", and credit cards are the best choice for small-amount payment. The most ideal way is to use credit card collection services launched by large platforms such as Dangdang's @@credit card collection
, Alibaba's small-amount collection, Dunhuang's online collection, etc.
service, it also just shows that small credit card collection has great potential for development.
Four. Reasonably spread the collection costs
With the changes in the global economy, the foreign trade demand environment has also undergone great changes. Many small and medium-sized foreign trade companies
have always relied on large orders to survive before. However, changes in the environment have brought about changes in order volume, and large orders have been replaced by small orders
The current situation faced by enterprises, however, is that many enterprises fail to change foreign trade receipts in a timely and effective manner
, which directly leads to extremely uncompetitive product prices. Therefore, it is also a feasible way to flexibly transform the traditional collection costs and reduce costs. Suitable for small order foreign trade payment methods, such as credit card payment, Paypal payment, Western Union payment, etc. I once had contact with a foreign trade customer who made handicrafts. When we were chatting, he told me that a single transaction was only a few hundred dollars. Then I asked him how to collect payment, and he told me that it was by letter
It is really inappropriate to have such a choice when using a certificate. So don’t blindly put the collection risks in the same basket, otherwise
the costs you will bear will be greatly increased.
We can use the above selection methods comprehensively. Each payment method has its own advantages and disadvantages.
As long as it is a method that suits your actual situation, you can speed up foreign trade payment collection. time, reduce the cost of foreign trade collection, and finally make the problem of difficulty in foreign trade collection no longer appear.