How to handle foreign exchange settlement
First, remittance
The definition of remittance
The payment side through the bank will pay the money received to the recipient, this payment is called remittance.
Types of remittances
Remittance can be divided into letter sink, wire transfer and ticket exchange three.
(1) Xinhui letter is the remittance of the bank should be the application of the sender, with the letter to the letter letter sent to the bank, commissioned by the bank to pay the money paid to the recipient of a remittance.
(2) wire transfer is the remittance of the bank should be the application of the sender, with a telegram or fax to the import bank, authorized to remit the bank to pay the payee to a remittance.
(3) The bill of exchange is the remittance of the bank should be the application of the remitter, on behalf of the remitter to open its foreign branches or agency acts to pay the bank‘s bank draft, the recipient of the draft to the bank to obtain a sum of money Settlement method.
In international trade, remittance settlement in accordance with the remittance of goods and shipping goods have different, can be divided into two kinds of prepaid and cash on delivery.
(1) prepaid payment prepaid payment, also known as the first after the out, refers to the exporter asked the importer will be prepaid part or all of the money through the bank remittance to the exporter, the exporter to ship the goods. The prepaid purchase price is mainly the exporter‘s concern that the importer does not perform the contract of sale or does not pay or pay the payment.
(2) cash on delivery to the payment, also known as the first out of the knot, the exporter first issued goods, importers after payment settlement. Cash on delivery can be divided into two ways: sale and consignment.
Remittance of business processes
The business flow of remittance can be summarized as follows:
(1) entrusted the remitter to entrust the remitting bank to remit the money to the payee.
(2) instruct the remittance bank to direct the remitting bank to pay the money to the payee.
(3) to pay the remitting bank to pay the money to the payee. Remittance settlement characteristics Compared with other foreign exchange settlement methods,
Remittance settlement has the following characteristics:
(1) the procedure is simple and the cost is less. Compared with other foreign exchange settlement methods, the remittance settlement procedure is the simplest and the least cost, only a small amount of remittance fee, so it is widely used in non-trade settlement, , In the case of mutual trust between the remittance settlement is the most ideal.
(2) greater risk In the trade settlement, for prepaid purchase of the buyer and cash on delivery of the seller, the risk of remittance is relatively large. Because once the money prepaid or the goods issued, if the other party does not perform delivery or fail to pay, then it will face the risk of silver and two empty, so the specific choice of remittance settlement should be very careful, should be on the other‘s credit status In-depth investigation to understand.
Second, collection
Collection definition
Collection refers to the creditor (exporter) issued a draft, commissioned by the bank to the debtor (importer) to collect sales or labor price of a foreign exchange settlement.
In the collection and settlement mode, there are generally four parties:
(1) A principal who refers to a customer who collects money from a consignee to a foreign payer, usually an exporter or a service provider.
(2) Collection of banks, refers to the commissioned by the entrusted to the transfer of foreign banks on behalf of the collection of money on behalf of the bank, usually the exporter or the location of the service provider of the bank.
(3) The collection bank, the bank accepting the entrusted bank to entrust the payment to the payer, usually the bank where the importer or service recipient is located.
(4) the payer, the customer who points to the payment of the bank, usually the importer or service recipient. Collection of collection is a foreign exchange settlement, especially in international trade settlement in the use of a more settlement.
Collection in accordance with whether the accompanying shipping documents are divided into light collection and follow-up collection of two ways.
(1) light collection, is not attached to the shipping documents, only by the payment of money collection. Accompanied by non-freight documents (such as invoices, advances list, etc.) collection, also belong to the light collection. The collection of light tickets is generally used for exporting mails, sample fees, commissions, on behalf of the payment, other trade subordinate fees and import claims and so on.
(2) With the single collection, refers to the consignee together with the shipping documents (such as bills of lading, insurance policies, etc.) to the collection bank for collection.
With the single collection according to the different conditions can be divided into payment orders and D / A two.
(1) payment orders, the principal commissioned by the bank for collection, instructed the bank only the payer to pay the goods before the delivery of goods to the payer.
(2) the presentation of a single note, refers to the principal issued a forward draft, together with the shipping documents to the bank for collection, through the bank to the payer prompts, the payer acceptance of the draft bank receipt of the goods to the payer, the payer You can then extract the goods, the bill of exchange after the payment of the parties to fulfill the payment obligations.
Collection of business processes (1) entrusted. In accordance with the provisions of the contract after the shipment of goods, fill in the power of attorney, out of the spot or forward bill, together with the full set of shipping documents sent to the collection bank, commissioned by the bank on behalf of the collection.
(2) commissioned. The collection bank will send the bill of exchange and the shipping documents and the instructions of the principal on the power of attorney to the collection bank and entrust the bank to collect the payment to the payer.
(3) Tips. The collection bank receives the bill of exchange and the shipping documents, and pays the payment or acceptance to the payer.
(4) payment. The payer pays the payment to the collecting bank, and the collecting bank sends the shipping document to the payer.
(5) payment. The collection bank remitted the money to the collection bank.
(6) settlement. The collection bank receives the payment from the bank and pays the money to the client.
The collection and settlement method has the following characteristics:
(1) high security For exporters, because it is payment or acceptance orders, in particular, payment orders, to achieve a silver goods in the face of two, not as cash on delivery as a "silver goods two empty" Risk; and for importers, collection and settlement is much more secure than prepaid.
(2) the procedure is slightly complicated, the cost is relatively high and the remittance settlement method, the collection and settlement procedures are relatively more, the required fee is also slightly higher.
(2) favorable to the importer For exporters, the risk of collection and settlement is smaller than the remittance settlement, but the risk is still relatively large.
Third, the letter of credit settlement
Definition of letter of credit
Letter of credit means that the bank (issuing bank) in accordance with the requirements of the client (the applicant) and not or their own initiative in accordance with the terms of the letter of credit conditions, with the provisions of documents, to the third party (beneficiary) or designated party Make a payment, or accept and pay the beneficiary to open a bill; or authorize another bank to carry out the payment, or acceptance and payment of draft; or authorized another bank to negotiate. In layman‘s terms, the letter of credit is a written document that the bank has opened a conditional commitment.
The party of the letter of credit
The parties to the letter of credit mainly have the applicant, the issuing bank, the beneficiary and so on.
(1) the applicant, the bank to apply for the opening of the letter of credit, that is, importers. When the transaction contract signed by the parties to the transaction requires the use of letters of credit settlement, the importer should be within the time limit stipulated in the contract to the importing bank to apply for a letter of credit in accordance with the contract.
(2) the issuing bank, is required to open the applicant‘s request to open a letter of credit of the bank, usually the importer‘s location bank. The issuing bank shall promptly and correctly open the letter of credit in accordance with the requirements of the applicant.
(3) beneficiaries, refers to the letter of credit clearly designated and accepted by the letter of credit, with invoices, bills of lading, etc. to collect payment, that is, exporters.
In addition, the parties to the letter of credit also include: notify the bank, refers to the issuing bank to accept the letter of credit transferred to the exporter‘s bank, usually the exporter‘s bank, is only responsible for proving the authenticity of the letter of credit, do not bear other obligations ;
Negotiable bank, refers to the willingness to buy beneficiaries to pay the bill of exchange to the bank, you can letter of credit on the issuing bank responsible for the terms and instructions to send the relevant documents to the issuing bank, to the issuing bank to recover the debt ;
Payment bank, refers to the letter of credit specified under the letter of credit under the payment of the bill, usually for the issuing bank, it can be designated by the issuing bank of another bank.
The contents of the letter of credit mainly include:
(1) the name of the issuing bank, including its full name and address, telegram registration, telex number, etc., in order to contact.
(2) the type of letter of credit. Such as "irrevocable letter of credit" or "revocable letter of credit", "sight letter of credit" or "forward letter of credit" and so on.
(3) the amount of letters of credit and currency, the amount of credit is the maximum amount of bank payment responsibility, the general application of case records.
(4) the number and date of the letter of credit. The date on the letter of credit is the date on which the issuing bank issued the letter of credit. (5) the applicant, including its full name and detailed address.
(6) the beneficiary, including its full name and address.
(7) bills of exchange and documents. If the beneficiary is required to pay the bill by receipt, it should specify what draft should be opened, such as sight draft or forward bill, the amount of money and payment bank.
(8) the requirements for transport, including the time of shipment, the port of shipment, the port of destination, the mode of transport and whether it can be in batches and transit.
(9) the validity of the letter of credit (referring to the bank to pay the payment period, such as exporters pay more than the time limit, the bank has the right to terminate their payment obligations) and the expiration of the location (in what country and region expires).
(10) Warranty terms refer to the terms of the issuing bank‘s guarantee of payment to the beneficiary and the drawee holder.
(11) other special conditions, by the issuing bank according to the specific circumstances of each business to make different provisions.
The type of letter of credit
L / C can be classified from different perspectives.
(1) the letter of credit according to whether the accompanying shipping documents can be divided into documentary credit and light letter of credit two.
① single letter of credit, refers to the single bill of exchange or by document only the letter of credit.
② light letter of credit, refers to the non-delivery
