There are three commonly used payment methods for foreign trade:
First, letter of credit (Letters of Credit, referred to as L / C), a wide range;
Second, remittance, including telegraphic transfer (T/T), mail transfer (M/T) and dean draft (D/D);
Third, Collection (Collection) mainly includes Payments against Payment (D/P for short) and Documents against Acceptance (D/A for short).
D/P is the payment presentation. After our shipment, we have prepared our negotiation documents. We submit the bills through our bank to the customer's bank. The customer bank prompts the customer that the documents have arrived and the customer submits the bill after the payment.
D/A is the acceptance of the bill, also through our bank to pay the bill to the customer bank, the difference is that the guests only need to accept our bills, you can take away the original documents, payment after the expiration.
T/T is wire transfer (documents are usually sent directly to customers by us without going through the bank). If we use T/T payment methods with customers, the general approach is that customers should give us 30% of the advance payment, and the remaining 70%. The general insurance method is that after the goods are loaded on the ship, the guest will pay the original bill of lading with our facsimile, and after the arrival of the bill, the entire original bill will be mailed to the guest.
The L/C L/C payment method belongs to the bank credit and is a kind of insurance payment method. However, the issuing bank's credit must be better. The documentary personnel must carefully check the invoice, and the company's business, storage, transportation, and documentary departments should coordinate and avoid. There is a discrepancy in the documents.
D/P payment presentation D/A The only difference between D/P and D/A is that the D/P must pay the bill and pay the bill of lading before paying the bill. If the bank gives the bill privately, the responsibility lies with the bank; D/A The importer can pay the bill after accepting the bill for XX days after acceptance of the bill. If the bill is not paid after the deadline, the bank has no responsibility.
Document vs payment is a method of document delivery under the documentary collection method. It means that the exporter’s delivery document is based on the payment of the importer, that is, the importer can only collect payment after payment. The bank collects the documents.
D/P Sight means that the exporter issues a draft on demand. The collecting bank prompts the importer that the importer must pay after seeing the ticket. When the payment is paid, the importer obtains the shipping document.
D/P after sight or after date indicates that the exporter has issued a long-term bill of exchange. The collecting bank prompts the importer to accept the importer's account before the maturity date of the bill of exchange or before the maturity date of the bill of exchange. Importer's payment bill.
D/A Documents against Acceptance is a method for the delivery of documents on the condition that the exporter (or the collecting bank) accepts the importer with acceptance under the documentary collection method.
The so-called "acceptance" is the behavior of the bill payer (importing party) to the bill of exchange when the collecting bank prompts a long-term bill of exchange. The acceptance procedure is for the payer to sign on the bill of exchange, endorse the word “acceptance†and the date, and return the bill of exchange to the holder. Irrespective of the transfer of the bill of exchange, the payer shall pay the bill on the expiry date of the bill of exchange.
In addition to D/P Sight, you can also do other things. Others are more risky (relative to L/C), but there are also customers who do not pay the redemption order due to market price, etc. If you do, Can only do good reputation, long-term contacts of the old customers.
T/T (Telegraphic Transfer) wire transfer means that the sending bank should apply for remittance by issuing a telegram, telegraphic telex, telex, or SWIFT to a branch or agency in another country (that is, a remittance bank) to instruct payment of a certain amount. Payee's remittance method.
The difference between T/T and L/C (1) In the T/T mode, the importer does not need to apply for the development of a letter of credit from the bank. The process concerning the part of the letter of credit can be omitted.
(2) After the exporter completes customs declaration and other formalities, the exporter no longer uses the “guarantee†method to deliver the document to the bank. Instead, the exporter sends the document directly to the importer on the “document list†page.
(3) The importer can directly handle the relevant formalities upon receipt of the receipt. The seller can collect the money and pay it to the importer.
(4) After the importer pays, the bank can notify the exporter to settle the foreign exchange.
References: From International Trade Practices Textbook and SIMTRADE Simulation Internship Platform TT is wire transfer, L/C is a letter of credit (can be withdrawn and irrevocable) can also be divided into long-term and short-term.
A TT will usually make a certain percentage of deposits, such as 30%. This can help companies have a project start-up capital. However, if LC is concerned, the foreign exchange payment is usually after the delivery, and it has already received the documents of all parties.
First, letter of credit (Letters of Credit, referred to as L / C), a wide range;
Second, remittance, including telegraphic transfer (T/T), mail transfer (M/T) and dean draft (D/D);
Third, Collection (Collection) mainly includes Payments against Payment (D/P for short) and Documents against Acceptance (D/A for short).
D/P is the payment presentation. After our shipment, we have prepared our negotiation documents. We submit the bills through our bank to the customer's bank. The customer bank prompts the customer that the documents have arrived and the customer submits the bill after the payment.
D/A is the acceptance of the bill, also through our bank to pay the bill to the customer bank, the difference is that the guests only need to accept our bills, you can take away the original documents, payment after the expiration.
T/T is wire transfer (documents are usually sent directly to customers by us without going through the bank). If we use T/T payment methods with customers, the general approach is that customers should give us 30% of the advance payment, and the remaining 70%. The general insurance method is that after the goods are loaded on the ship, the guest will pay the original bill of lading with our facsimile, and after the arrival of the bill, the entire original bill will be mailed to the guest.
The L/C L/C payment method belongs to the bank credit and is a kind of insurance payment method. However, the issuing bank's credit must be better. The documentary personnel must carefully check the invoice, and the company's business, storage, transportation, and documentary departments should coordinate and avoid. There is a discrepancy in the documents.
D/P payment presentation D/A The only difference between D/P and D/A is that the D/P must pay the bill and pay the bill of lading before paying the bill. If the bank gives the bill privately, the responsibility lies with the bank; D/A The importer can pay the bill after accepting the bill for XX days after acceptance of the bill. If the bill is not paid after the deadline, the bank has no responsibility.
Document vs payment is a method of document delivery under the documentary collection method. It means that the exporter’s delivery document is based on the payment of the importer, that is, the importer can only collect payment after payment. The bank collects the documents.
D/P Sight means that the exporter issues a draft on demand. The collecting bank prompts the importer that the importer must pay after seeing the ticket. When the payment is paid, the importer obtains the shipping document.
D/P after sight or after date indicates that the exporter has issued a long-term bill of exchange. The collecting bank prompts the importer to accept the importer's account before the maturity date of the bill of exchange or before the maturity date of the bill of exchange. Importer's payment bill.
D/A Documents against Acceptance is a method for the delivery of documents on the condition that the exporter (or the collecting bank) accepts the importer with acceptance under the documentary collection method.
The so-called "acceptance" is the behavior of the bill payer (importing party) to the bill of exchange when the collecting bank prompts a long-term bill of exchange. The acceptance procedure is for the payer to sign on the bill of exchange, endorse the word “acceptance†and the date, and return the bill of exchange to the holder. Irrespective of the transfer of the bill of exchange, the payer shall pay the bill on the expiry date of the bill of exchange.
In addition to D/P Sight, you can also do other things. Others are more risky (relative to L/C), but there are also customers who do not pay the redemption order due to market price, etc. If you do, Can only do good reputation, long-term contacts of the old customers.
T/T (Telegraphic Transfer) wire transfer means that the sending bank should apply for remittance by issuing a telegram, telegraphic telex, telex, or SWIFT to a branch or agency in another country (that is, a remittance bank) to instruct payment of a certain amount. Payee's remittance method.
The difference between T/T and L/C (1) In the T/T mode, the importer does not need to apply for the development of a letter of credit from the bank. The process concerning the part of the letter of credit can be omitted.
(2) After the exporter completes customs declaration and other formalities, the exporter no longer uses the “guarantee†method to deliver the document to the bank. Instead, the exporter sends the document directly to the importer on the “document list†page.
(3) The importer can directly handle the relevant formalities upon receipt of the receipt. The seller can collect the money and pay it to the importer.
(4) After the importer pays, the bank can notify the exporter to settle the foreign exchange.
References: From International Trade Practices Textbook and SIMTRADE Simulation Internship Platform TT is wire transfer, L/C is a letter of credit (can be withdrawn and irrevocable) can also be divided into long-term and short-term.
A TT will usually make a certain percentage of deposits, such as 30%. This can help companies have a project start-up capital. However, if LC is concerned, the foreign exchange payment is usually after the delivery, and it has already received the documents of all parties.