《外贸英语与实务》课程教学资源（单元课文）第七单元 International Payment of Goods

UNIT 7 International Payment of Goods PART1 Case Lead-in PART 2 Reading PART 3 Sample Conversations ⑤大连理工大学出版社

UNIT 7 International Payment of Goods PART 1 Case Lead-in PART 2 Reading PART 3 Sample Conversations

Part1 Case Lead-in A Chinese company A wanted to push sales of his products to a Japanese company B and made an offer on L/C terms.B replied that he would accept the offer if A changed the term of payment into D/P after 60 days sight, and appointed Bank B as the collecting bank.Why did B make such a counteroffer? Just as in domestic trade,any transaction in intemational trade,large or smal,has to be settled through payment by the buyer.However,payment in international trade is often beset with more difficulties owing to the fact that either party to a business transaction has relatively limited knowledge of the financial strength and commercial reputation of his counterpart.Payment clause including such aspects as time,place,modes and instruments of payment is very important in an international sales contract. ⑤大连理工大学出版社

Part 1 Case Lead-in A Chinese company A wanted to push sales of his products to a Japanese company B and made an offer on L/C terms. B replied that he would accept the offer if A changed the term of payment into D/P after 60 days sight, and appointed Bank B as the collecting bank. Why did B make such a counteroffer? Just as in domestic trade, any transaction in international trade, large or small, has to be settled through payment by the buyer. However, payment in international trade is often beset with more difficulties owing to the fact that either party to a business transaction has relatively limited knowledge of the financial strength and commercial reputation of his counterpart. Payment clause including such aspects as time, place, modes and instruments of payment is very important in an international sales contract

Part2 Reading International Payment Chinese Payment for international trade is difficult and complicated for a number of reasons.First,longer distance and more procedures are involved.Second,longer time is needed.Third,different regulations and laws may be involved.Fourth,currencies and financial systems are different in different countries.Payment must be handled with special care. ⑤大连理工大学出版社 西王至四

Part 2 Reading International Payment Payment for international trade is difficult and complicated for a number of reasons. First, longer distance and more procedures are involved. Second, longer time is needed. Third, different regulations and laws may be involved. Fourth, currencies and financial systems are different in different countries. Payment must be handled with special care. Chinese

Part2 Reading Instruments of Payment Chinese Draft Draft,also referred to as a bill of exchange,is an unconditional written order issued by one person(the drawer)to another(the drawee),requiring the latter to pay on demand,or at a fixed time or determinable future time a sum of money to or to the order of a specified person,or to the bearer(the payee).The payee and the drawer are generally but not necessarily the same person,as the drawer can instruct the drawee either to pay"to the order of ourselves"or"to the order of someone else",for instance,the bank. According to the time of payment,a draft can be a sight draft or a time draft(usance draft).The former calls for immediate payment on presentation to the payee while the latter is payable at a later date,e.g.30,45,60 or 90 days after sight or a certain date.According to the identity of the drawer,a draft can be either a commercial draft or a banker's draft.A commercial draft is drawn by a firm or a person,while a banker's draft is drawn by a bank.According to whether the draft is accompanied by shipping documents or not,a draft is either a clean draft or a documentary draft.A documentary draft is accompanied by the relevant documents such as the B/L,the invoice,the insurance policy,etc. ⑤大连理工大学出版社

Part 2 Reading Instruments of Payment Draft Draft, also referred to as a bill of exchange, is an unconditional written order issued by one person (the drawer) to another (the drawee), requiring the latter to pay on demand, or at a fixed time or determinable future time a sum of money to or to the order of a specified person, or to the bearer (the payee). The payee and the drawer are generally but not necessarily the same person, as the drawer can instruct the drawee either to pay “to the order of ourselves” or “to the order of someone else”, for instance, the bank. According to the time of payment, a draft can be a sight draft or a time draft (usance draft). The former calls for immediate payment on presentation to the payee while the latter is payable at a later date, e.g. 30, 45, 60 or 90 days after sight or a certain date. According to the identity of the drawer, a draft can be either a commercial draft or a banker’s draft. A commercial draft is drawn by a firm or a person, while a banker’s draft is drawn by a bank. According to whether the draft is accompanied by shipping documents or not, a draft is either a clean draft or a documentary draft. A documentary draft is accompanied by the relevant documents such as the B/L, the invoice, the insurance policy, etc. Chinese

Part2 Reading Instruments of Payment Chinese Check Check is an unconditional order drawn by a depositor on a bank,requiring the bank to pay the sum of money to the payee.A check is always at sight and should be paid upon presentation.If a check is issued by a bank,it is called a banker's demand draft. Promissory Note Promissory note is an unconditional written promise made by one person to another person,engaging to pay on demand,or at a fixed time or determinable future time a sum of money to or to the order of a specified person, or to the bearer.A promissory note can be issued by a person,a firm or a bank,but those issued by persons and firms are not widely used in trade today. ⑤大连理工大学出版社

Part 2 Reading Instruments of Payment Check Check is an unconditional order drawn by a depositor on a bank, requiring the bank to pay the sum of money to the payee. A check is always at sight and should be paid upon presentation. If a check is issued by a bank, it is called a banker’s demand draft. Promissory Note Promissory note is an unconditional written promise made by one person to another person, engaging to pay on demand, or at a fixed time or determinable future time a sum of money to or to the order of a specified person, or to the bearer. A promissory note can be issued by a person, a firm or a bank, but those issued by persons and firms are not widely used in trade today. Chinese

Part2 Reading Terms of Payment Chinese Remittance Remittance means that the payer may on his own initiative remit money to the payee through banks or other institutions.In this case,the buyer gives money to his local bank,the local bank,in turn,issues a trust deed for payment and sends it for payment to its branch or correspondent bank in the seller's country and instructs the bank to make payment to the seller. According to the different means of sending the trust deed for payment,remittance can be divided into mail transfer(M/T),telegraphic transfer(T/T)and demand draft(D/D).M/T refers to the transfer made between banks by mail,with the advantages of low charges.T/T refers to the transfer made by the telecommunication system such as telex or telegraph.Under D/D,the remitting bank,at the request of the buyer,draws a demand draft on its branch or correspondent bank,and instruct the latter to make a certain amount of payment to the seller on behalf of the buyer.The buyer will buy the demand draft from the remitting bank and send the draft to the seller who will present the draft to the paying bank to get money.D/D is transferable,which is different from M/T and T/T. Among these,T/T is very fast and SWIFT members are able to transfer funds within their own telecommunication network at a lower cost,which has made T/T very popular as most international banks are SWIFT members ⑤大连理工大学出版社

Part 2 Reading Terms of Payment Remittance Remittance means that the payer may on his own initiative remit money to the payee through banks or other institutions. In this case, the buyer gives money to his local bank, the local bank, in turn, issues a trust deed for payment and sends it for payment to its branch or correspondent bank in the seller’s country and instructs the bank to make payment to the seller. According to the different means of sending the trust deed for payment, remittance can be divided into mail transfer (M/T), telegraphic transfer (T/T) and demand draft (D/D). M/T refers to the transfer made between banks by mail, with the advantages of low charges. T/T refers to the transfer made by the telecommunication system such as telex or telegraph. Under D/D, the remitting bank, at the request of the buyer, draws a demand draft on its branch or correspondent bank, and instruct the latter to make a certain amount of payment to the seller on behalf of the buyer. The buyer will buy the demand draft from the remitting bank and send the draft to the seller who will present the draft to the paying bank to get money. D/D is transferable, which is different from M/T and T/T. Among these, T/T is very fast and SWIFT members are able to transfer funds within their own telecommunication network at a lower cost, which has made T/T very popular as most international banks are SWIFT members. Chinese

Part2 Reading Terms of Payment Chinese Letter of Credit In the practice of foreign trade,the importers prefer to gain control over the goods before paying the money while the exporters prefer to get paid before releasing the goods.A documentary L/C is an effective way to solve this conflicting problem.It is a written undertaking by a bank to the exporter at the request,and in accordance with the instruction of the importer to effect payment up to a stated sum of money,within a prescribed time limit and against documents.It is a kind of banker's credit,which means that the bank is responsible to pay money and tender documents on behalf of both parties. There are many types of L/C. Irrevocable L/C An irrevocable L/C cannot be amended or revoked by either the opening bank or the importer within the credit validity without the consent of the exporter.According to UCP 600,an L/C should be irrevocable. ⑤大连理工大学出版社

Part 2 Reading Terms of Payment Letter of Credit In the practice of foreign trade, the importers prefer to gain control over the goods before paying the money while the exporters prefer to get paid before releasing the goods. A documentary L/C is an effective way to solve this conflicting problem. It is a written undertaking by a bank to the exporter at the request, and in accordance with the instruction of the importer to effect payment up to a stated sum of money, within a prescribed time limit and against documents. It is a kind of banker’s credit, which means that the bank is responsible to pay money and tender documents on behalf of both parties. There are many types of L/C. Irrevocable L/C An irrevocable L/C cannot be amended or revoked by either the opening bank or the importer within the credit validity without the consent of the exporter. According to UCP 600, an L/C should be irrevocable. Chinese

Part2 Reading Terms of Payment Chinese Sight L/C and Usance L/C A sight L/C is one by which the beneficiary is paid upon presentation of valid documents.A usance or time LC means that the beneficiary is paid in a specified period of time after the presentation of valid documents. Under a sight L/C,the exporter will issue a sight draft;while under a usance L/C,the exporter will issue a usance draft. Confirmed L/C and unconfirmed L/C A confirmed L/C means the undertaking of a bank in the exporter's country besides that of the opening bank. The confirming bank will pay if the issuing bank cannot pay.Thus,the exporter has double assurance of payment and is better protected.An unconfirmed L/C means the issuing bank's undertaking of payment only.There is no undertaking on the part of the advising bank or another bank. Other types of L/C are clean L/C and documentary L/C,transferable L/C and non-transferable L/C,revolving L/C,back to back L/C and so on.An L/C usually includes the following details:the type,amount,date of expiry, description of goods,deadline of shipment,shipping place,arrival place,mode of transport,documents required for negotiation,etc. ⑤大连理工大学出版社

Part 2 Reading Terms of Payment Sight L/C and Usance L/C A sight L/C is one by which the beneficiary is paid upon presentation of valid documents. A usance or time L/C means that the beneficiary is paid in a specified period of time after the presentation of valid documents. Under a sight L/C, the exporter will issue a sight draft; while under a usance L/C, the exporter will issue a usance draft. Confirmed L/C and unconfirmed L/C A confirmed L/C means the undertaking of a bank in the exporter’s country besides that of the opening bank. The confirming bank will pay if the issuing bank cannot pay. Thus, the exporter has double assurance of payment and is better protected. An unconfirmed L/C means the issuing bank’s undertaking of payment only. There is no undertaking on the part of the advising bank or another bank. Other types of L/C are clean L/C and documentary L/C, transferable L/C and non- transferable L/C, revolving L/C, back to back L/C and so on. An L/C usually includes the following details: the type, amount, date of expiry, description of goods, deadline of shipment, shipping place, arrival place, mode of transport, documents required for negotiation, etc. Chinese

Part2 Reading Terms of Payment Chinese Collection Payment is sometimes made by collection through banks under the terms of Documents against Payment (D/P)or Documents against Acceptance (D/A).In this case,the banks will only do the service of collecting and remitting and will not be liable for non-payment of the importer.Collection can be documentary collection which needs the relevant shipping documents attached to a draft,or clean collection which uses only a draft. In documentary collection,the exporter sends the draft and the shipping documents representing title to the goods to the remitting bank which forwards them to the collecting bank in the importer's country.The collecting bank in turn contacts the importer. In the case of D/P,documents will not be released to the importer until payment is made.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,say,30,45,60 or 90 days after presentation of the documents,but he is not allowed to get hold of the documents until he pays.In the case of D/A,documents are handed over to the importer upon his acceptance of the draft drawn by the exporter. Payment will not be made until a later date.Then the collecting bank deducts the relative commissions and charges and remits the balance to the remitting bank which will transfer the sum into the exporter's current account. ⑤大连理工大学出版社

Part 2 Reading Terms of Payment Collection Payment is sometimes made by collection through banks under the terms of Documents against Payment (D/P) or Documents against Acceptance (D/A). In this case, the banks will only do the service of collecting and remitting and will not be liable for non-payment of the importer. Collection can be documentary collection which needs the relevant shipping documents attached to a draft, or clean collection which uses only a draft. In documentary collection, the exporter sends the draft and the shipping documents representing title to the goods to the remitting bank which forwards them to the collecting bank in the importer’s country. The collecting bank in turn contacts the importer. In the case of D/P, documents will not be released to the importer until payment is made. 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, say, 30, 45, 60 or 90 days after presentation of the documents, but he is not allowed to get hold of the documents until he pays. In the case of D/A, documents are handed over to the importer upon his acceptance of the draft drawn by the exporter. Payment will not be made until a later date. Then the collecting bank deducts the relative commissions and charges and remits the balance to the remitting bank which will transfer the sum into the exporter’s current account. Chinese

Part2 Reading Factoring Chinese Factoring is a complete financial package that combines working capital financing,credit risk protection, accounts receivable bookkeeping and collection services.It is offered under an agreement between the factor and a seller.Under the agreement,the factor purchases the seller's accounts receivable,normally without recourse,and assumes the responsibility for the debtor's financial ability to pay.If the debtor goes bankrupt or is unable to pay its debts for credit reasons,the factor will pay the seller.When the seller and the buyer are located in different countries the service is called international factoring.This allows the buyer to place an order on open account terms without opening letters of credit. ⑤大连理工大学出版社

Part 2 Reading Factoring Factoring is a complete financial package that combines working capital financing, credit risk protection, accounts receivable bookkeeping and collection services. It is offered under an agreement between the factor and a seller. Under the agreement, the factor purchases the seller’s accounts receivable, normally without recourse, and assumes the responsibility for the debtor’s financial ability to pay. If the debtor goes bankrupt or is unable to pay its debts for credit reasons, the factor will pay the seller. When the seller and the buyer are located in different countries the service is called international factoring. This allows the buyer to place an order on open account terms without opening letters of credit. Chinese