Logistique et Transport International

Time Drafts and Date Drafts If the exporter wants to extend credit to the buyer, a time draft can be used to state that payment is due within a certain time after the buyer accepts the draft and receives the goods, for example, 30 days after acceptance. By signing and writing "accepted" on the draft, the buyer is formally obligated to pay within the stated time. When this is done the draft is called a trade acceptance and can be either kept by the exporter until maturity or sold to a bank at a discount for immediate payment. A date draft differs slightly from a time draft in that it specifies a date on which payment is due, for example, December 1, XXXX, rather than a time period after the draft is accepted. When a sight draft or time draft is used, a buyer can delay payment by delaying acceptance of the draft. A date draft can prevent this delay in payment but still must be accepted. When a bank accepts a draft, it becomes an obligation of the bank and a negotiable inv...

A Typical Letter of Credit Transaction Here is what typically happens when payment is made by an irrevocable letter of credit confirmed by a local bank: •After the exporter and customer agree on the terms of a sale, the customer arranges for its bank to open a letter of credit. (Delays may be encountered if, for example, the buyer has insufficient funds.) •The buyer's bank prepares an irrevocable letter of credit, including all instructions to the seller concerning the shipment. •The buyer's bank sends the irrevocable letter of credit to a local bank, requesting confirmation. The exporter may request that a particular bank be the confirming bank, or the foreign bank selects one of its local correspondent banks. •The local bank prepares a letter of confirmation to forward to the exporter along with the irrevocable letter of credit. •The exporter reviews carefully all conditions in the letter of credit. The exporter's freight forwarder should be contacted to make sure t...

There are several basic methods of receiving payment for products sold abroad. As with domestic sales, a major factor that determines the method of payment is the amount of trust in the buyer's ability and willingness to pay. For sales within our country, if the buyer has good credit, sales are usually made on open account; if not, cash in advance is required. For export sales, these same methods may be used; however, other methods are also often used in international trade. Ranked in order from most secure for the exporter to least secure, the basic methods of payment are: •cash in advance, •letter of credit, •documentary collection or draft, •open account, and •other payment mechanisms, such as consignment sales Since getting paid in full and on time is of utmost concern to exporters, risk is a major consideration. Many factors make exporting riskier than domestic sales. However, there are also several methods of reducing risks. One of the most important factors in reducin...

The following will outline the different methods of payment where a bank would be involved. In this article, we refer to a ‘creditor’ as a ‘person/institution that you wish to make a payment to’. Cash You can pay a creditor with cash (notes and coins) which can exchange hands immediately. Cheque Cheques can be issued to the creditor which is usually accompanied by a cheque guarantee card. For large amounts, this can be the most secure method of payment compared to exchanging cash. Cheques can also be used to send payment via post conveniently. It is common for your account to be debited within five working days after the creditor deposits the cheque into their bank account. 1.A cheque is written (made payable to the creditor) and signed by you 2.The creditor deposits the cheque at their bank 3.After routine checks, the amount is debited from your bank account (within 5 working days) Switch Card (or Other ‘Debit’ Card) Switch is an electronic payment that is accepted b...