Chapter 4

1. Chapter 4 Payment Methods - Collections 专业PPT/商演示设计制作

2. Review Question 1 : How do the international funds be transferred? Question 2 : Definition and parties of Remittance? Question 3 : The comparison of three types of Remittance? Question 4 : Application of Remittance in I.S

3. Collections means the handling by banks, on instructions received, of documents, in order to: -- obtain acceptance and/or payment; -- deliver commercial documents against acceptance or payment; -- deliver documents on other terms and conditions. Collection is an arrangement whereby the seller draws a draft on the buyer , and /or shipping documents are forwarded to his bank, authorizing it to collect the money from the buyer through its correspondent bank . Conception of Collection

4. The Principal --The person who entrusts the collection items to his bank The Remitting Bank --The exporter’s bank The Collecting Bank --It is to receive the collection items from the remitting bank and sent the draft to the drawee. It is the correspondent bank or a branch/head office of the remitting bank. Basic parties to a collection

5. The Presenting Bank -- It is to notify the drawee of arrival of the collection items, to present the draft to the drawee on behalf of the collection bank and to request payment or acceptance from the drawee. The drawee -- The person whom the draft is drawn on, he is the importer Basic parties to a collection

6. importer /drawee exporter/ principal 1Deliver goods 11Deliver goods 10Hand in B/L 2B/L Carrier 7Pay 8Release Documents D/A or D/P 3Documents and Instructions (Application) 4Rept. 5Collection Order or Instruction & docs. Collecting Bank 9Credit Advice or Debit Authorization Remitting Bank Flow chart of documentary collection How to release documents?

7. Types of Collection • Collection can be classified as clean collection and documentary collection Clean Collection • Documents against payment as sight (D/P at sight) • Documents against payment after sight (D/P after sight) • D/P after sight against Trust Receipt (D/P, T/R) • Documents against acceptance (D/A) Documenatary Collection

8. Types of Collection • Clean Collection • --The collection on financial instruments alone without • being accompanied by commercial documents • Documentary Collection • -- The collection on financial instruments being accompanied by • commercial documents or the collection on shipping documents • without financial docs. • Collection order --The collection order is a standard form of authority which enables the exporter to include specific instruction to his bank regarding documentary collection

9. Collection Draft • Collection Draft: Tenor can be sight or time; • the drawer is the exporter and the drawee is the importer . • Payee can be made as； -- to be the beneficiary -- to be the remitting bank -- to be the collecting bank

10. Procedures under Documentary Collection contract Drawer Drawee 5)docu-ments 3)Presenting draft 7)payment 1)Documents,draft and application 9)payment 6)present-ing for payment 4)Accept 2)Documents,draft and Collection instruction Remitting bank Collecting bank 8)payment

11. Risks under Collection • To the Exporter • -- Under D/P • When a buyer refuses to take delivery, the dishonest • importer reject the goods in hope of a price reduction • -- Under D/A • The goods are released on acceptance, with no • guarantee that the payment will be forthcoming at • maturity

12. Risks under Collection • To the importer • -- Under D/P • No opportunity to inspect goods before making • payment • -- Under D/A • The importer’s credit-worthiness will be harmed if he • refuse to make payment

13. Preview • Compare the advantages and disadvantages • Of remittance and collection? • Based on the risks associated with importer and • Exporter, how to protect them against risks?

14. Thank You