3-export-import_payments shogw different
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The document outlines various export import practices and payment procedures, including terms like cash in advance, open account, and letter of credit, each presenting different levels of payment risk for sellers. It also discusses export financing through private and public sources, along with the role of foreign freight forwarders in assisting exporters with documentation and logistics. Additionally, it highlights key shipping documents and procedures, including export bills of lading and commercial invoices, while noting methods for efficient transport such as air freight and containers.
3-export-import_payments shogw different
- 2. Payment Procedures… • Payment terms offered by exporters to foreign buyers – Cash in advance • When credit standing of the buyer unknown or uncertain – Open account • When sale is made on open account – Seller assumes payment risk – Offered to reliable customers in economically stable countries
- 3. Payment Procedures… – Consignment • Goods shipped to buyer; payment made when sold • Payment risk assumed by seller – Letter of credit (L/C) • Document issued by buyer’s bank – Promise to pay seller specified amount when bank has received documents stipulated in letter of credit
- 4. Payment Procedures • Letter of credit • Confirmed L/C – Correspondent bank in seller’s country agrees to honor issuing bank’s L/C • Irrevocable L/C – Once the seller has accepted L/C, buyer cannot alter or cancel it without seller’s consent
- 5. CFR Cost, Freight, Foreign Port; FAS Free Along Side leave it there after clearing for export FOB Seller will load on board after clearing for export (Cost and risk shared INCOTERMS 2010) FCA Free Carrier – clear for export and handover to named carrier CPT Carriage Paid To – seller pays – named place of delivery DEQ/DES Delivered Ex Quay/Ship – named port of delivery DDP/DDU Delivered Duty Paid/unpaid ; EXW Just keep outside/warehouse CIF insurance for maritime; DES CIF + insurance for goods as well In 2010, eliminated! DES, DAF, DEQ, DDU
- 6. Letter of Credit Transaction
- 7. Documents • Air Waybill – A bill of lading issued by an air carrier • Pro Forma Invoice – Exporter’s formal quotation: description of the merchandise, price, delivery time, method of shipment, ports of exit and entry, and terms of sale
- 8. Export Financing… • Private Source – Commercial Banks – Banker’s acceptance • Time draft with maturity of less than 270 days that has been accepted by the bank on which the draft was drawn, thus becoming the accepting bank’s obligation; may be bought and sold at a discount in the financial markets like other commercial paper – Factoring • Discounting an account receivable without recourse
- 9. Export Financing… – Forfeiting • Purchasing without recourse an account receivable whose credit terms are longer than the 90 to 180 days usual in factoring; unlike factoring, political and transfer risks are borne by the forfeiter
- 10. Export Financing • Public Sources – Export-Import Bank (Ex-Imbank) • Principal government agency that aids American exporters by means of loans, guarantees, and insurance programs – Overseas Private Investment Corporation (OPIC) • U.S. government corporation that offers American investors in developing countries insurance against expropriation, currency inconvertibility, and damages from wars and revolutions
- 11. Other Public Incentives • Foreign Trade Zone – Duty-free area designed to facilitate trade by reducing the effect of customs restrictions • Free Trade Zone – An area designated by the government as outside its customs territory • Customs drawback – Rebate on customs duties
- 12. Export Procedures • Foreign freight forwarders act as agents for exporters – Prepare documents – Book space – Offer advice about • Markets • Regulations • Transportation • Packing – Supply cargo insurance
- 13. Official Procedures for Importing and Exporting
- 14. Shipping Documents… • Shipper’s Export Declaration – U.S. Department of Commerce form to control export shipments and record export statistics • Validated export license – Document issued by the U.S. government authorizing export of strategic commodity or shipment to unfriendly country • General Export License – Covers export commodities for which validated license not required; no formal application required
- 15. Shipping Documents • Export Bill of Lading – Contract of carriage between shipper and carrier: straight bill of lading is nonnegotiable; endorsed “to order” bill gives holder claim on merchandise • Insurance Certificate
- 16. Collection Documents • Commercial invoice • Include origin of goods, export packing marks, and clause stating goods will not be transshipped – Consular invoice • Purchased from the consul and prepared in local language – Certificate of origin • Issued by local Chamber of Commerce – Inspection certificate • Frequently required for grain, food, live animals
- 17. Export Shipments… Containers Reduce theft and handling costs LASH (lighter aboard ship) Barges for shallow inland waterways RO-RO (roll on-roll off) Can drive onto vessel Air Freight Can arrive in one day
- 18. Sea-Air Total Cost Comparison, Shipment and Spare Parts
- 19. Air Freight • Total cost may decrease • Either the firm or the product may be air- dependent • The market may be perishable • Competitive position may be strengthened