10
Remittance
• Remittance
Contract payer
Funds flow Payment instruction Payee/ beneficiary
Funds
Importer’s bank Payment instruction Exporter’s bank
Remittance
4. Funds
Paying Bank (in exporter’s country)
3.Payment order by airmail
The procedure of T/T 电汇流程图
Remitter (Importer) Contract payee (Exporter)
1.Written Application Remitting Bank (in importer’s country)
(2) The amount and currency.
– The amount the drawee should pay and the currency used should be stated out clearly in the bill of exchange. – In the international trade, generally say, the amount and currency should be strictly accordance with that of sales contract and letter of credit, otherwise the drawee could have the right to reject.
• Classification
– Mail Transfer, M/T
– Telegraphic Transfer, T/T
– Remittance by Banker’s Demand Draft，D/D
• The Usage of the Remittance -- Open account
-- Payment in Advance
1) D/D application 3)bank demand draft 4)Presenting
payee
5)payment
2)Bank demand draft
Remitting bank
6)Reimbursement claim
Paying bank
Comparison of the M/T, T/T and D/D
Chapter Seven
International Payment
Learning objectives
•
• • •
Master the instruments of international payment. Familiar with the stages involved in remittance, collection, and letter of credit. Know the variations of documentary credit. Master the nature and classification of the tree basic methods of payment.
(4) Place of payment and issue.
– The place of issue is always same as the place where the drawer exists and place of payment is same as the drawees.
(5) Drawer’s name and signature.
D/P after sight
• After the shipment, the seller draws a time draft and makes presentation of it with the full set of shipment documents to the buyer through the banks, and the buyer accepts the bill after confirming it and makes the payment on the mature date; then the bank releases the documents to the buyer.
Collection • Conception of Collection – Definition Collection is an arrangement whereby the seller draws a draft on the buyer and authorizes its bank to collect.
– Nature of Collection
Collection is a kind of commercial credit.
• The Involved Parties – Principal – Remitting Bank – Collecting Bank – Payer • Types – Documents against Payment: D/P --Classification D/P at sight D/P after sight – Documents against Acceptance，D/A
Procedure of remittance and parties involved
• First, the remitter (the importer) applies for a remittance. To do so the importer needs to have sufficient funds in his account in the bank. • The remitting bank issues a remittance instruction to one of its overseas branches or correspondent banks in the exporter’s country. • When the overseas branch or correspondent bank receives the remittance instruction, it becomes the paying bank and will credit the payee’s (the exporter’s) account with the relevant amount accordingly.
(3) The time of payment.
– It should be stated out clearly in the bill of export, such as “at sight”, “after 30 days”. – The bill of exchange without payment time is not acceptable.
• Draft, Bill)
1.2 The Content of Bill of Exchange
(1) The parties of bill of exchange.
① Drawer. • The person who writes the order and gives directions to the person to make a specific payment of money. ② Drawee. • The person to whom the order is addressed and who is to pay the money. ③ Payee. • The person (individual, firm, corporation, or bank) to whom the payment is ordered to be made. • The drawer and payee may often be the same person.
Collection
D/P at sight
• After the shipment, the seller draws a sight draft and makes presentation of it with the full set of shipment documents to the buyer through the banks, and the buyer makes the payment at sight of the bill; the bank releases the documents to the buyer on receipt of the full payment from the buyer.
Time of transfer Security
ChargeΒιβλιοθήκη High2.2 Collection 2.2. Collection
• • • • • • Conception of Collection The Involved Parties Types Procedure of Documentary Collection Advantages and Disadvantages Remarks for Collection
Items
Methods of transfer
T/T
M/T
D/D
Mail or carried by remitter Slow Stop-payment is time consuming Lowest
Cable/Telex/SWI Airmail FT Fastest Quite safe Slow Reliable, but may be lost in post Low