International Payment

Where We Go Wrong Insurance Certificates

• Required risks not covered
• Amount of coverage not enough
• Currency not consistent with L/C
• Effective date later than bills of lading

Exporter Trouble Shooting

• Can you meet documentary requirements
• Can you meet shipping/expire/dates?
• Is description of goods accurate?
• Are names and addresses correct?

Exporter Trouble-Shooting

• Is credit irrevocable?
• Is credit confirmed?
• Is credit amount correct?
• Is credit tenor correct?
• Is L/C negotiable?

A Letter of Credit Does Not:

• Replace a contract
• Substitute for buyer’s confidence in seller and vice versa
• Constitute a guarantee of performance
• Assure payment if an condition not meet

Advantages to both parties:

• Flexible document
• Governed by internationally accepted set of rules
• The Uniform Customs and Practice for Documentary Credits (The UCP)

Problems of L/C

• Shipping schedule is not met
• stipulations concerning freight cost are unacceptable
• price is insufficient due to FX rate changes
• unexpected quantity of product
• description of product insufficient or too detailed
• documents are impossible to obtain specified in L/C

Documentary Collections (DC)

• Three Types of DC
• Documents against Payment (D/P)
• Documents against Acceptance (D/A)
• Collection with Acceptance (Acceptance D/P)

Documents against Payment (D/P)

• Documents against Payment (D/P)
• Buyer may only receives the title and other documents after paying for the goods
• Documents against Acceptance (D/A)
• the buyer may receive the title and other documents after signing a time draft promising to pay at a later date.
• Acceptance Documents against Payment (Acceptance D/P)
• the buyer signs a time draft for payment at a later date. Goods remain in escrow until payment is made