Cash in Advance

1

-
Methods of Payment Risk Assessment
Positive
Negative

• Cash in Advance

Letters of Credit

• Standby
• Commercial (Acceptances)
• Confirmed
• Transferable
• Back-to-Back
• Assignment of Proceeds

• Insurance
• Ex-Im Bank
• CEFO

Vendor Financing
Foreign Receivables
Foreign Exchange
Neutral Zone
Importer (Buyer) (Applicant)
Exporter (Seller) (Beneficiary)
Documentary Collection
Open Account
Shipment
-

Negative
Positive
2
Letter of Credit Terms
Involved Parties
3
Letter of Credit Terms Activities Terms

• Advice
• Amendment
• Confirmed
• Discrepancy
• Documentation
• Draft
• Sight Draft
• Time Draft

• Irrevocable
• Issuance
• Negotiation
• Revocable

4
Types of Letters of Credit

• Back-to-Back
• Confirmed
• Straight
• Negotiation
• Sight
• Standby
• Transferable
• Usance

5
Export Letter of Credit Cycle
5. Product is Shipped
1.
1.
2. Application
Applicant Importer/Buyer
Buyer Seller Agree
Beneficiary Exporter/Seller
4. Letter of Credit
6. Documents
2.
8. Documents
10.
3. Letter of Credit
7. Documents
Exporters Bank/ Advising Bank
Importers Bank/ Issuing Bank
9.
6
Documentary Collection Terms

• Buyer
• Seller
• Remitting Bank
• Collecting Bank
• Bill of Exchange/Draft
• Time/Usance Bill of Exchange

7
Documentary Collection
2. Product is Shipped
1.
1.
Importer/Buyer
Exporter/Seller
Buyer Seller Agree
5.
3. Documents Draft
6. Documents
5.
4. Documents Draft
Exporters Bank/ Remitting Bank
Importers Bank/ Collecting Bank
5.