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“Show Me The Money” Getting Paid for your Export Sales. ISRI National Convention April 6 th , 2006. Presented by : Jane Hay, VP International Banking, U.S. Bank. U.S. Bank . 6 th largest bank in the U.S. 2009 Billion in assets
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Getting Paid for your Export Sales
ISRI National Convention
April 6th, 2006
Jane Hay, VP
International Banking, U.S. Bank
Please incorporate the following provisions into the letter of credit:
Type of Credit
Use the KISS Rule!
__ Confirmed ____Unconfirmed, irrevocable letter of credit in favor of:
and available with:
U.S. Bank National Association Telex: TRT 192179 USB INTL MPS
Minneapolis, MN SWIFT: USBKUS44
U.S.$ __________ or _________________ (named foreign currency)
b) __ Time - at ____ days, ___ sight __ from B/L
Sight and time drafts must be drawn on U.S. Bank
c)_____ Deferred Payment at ___ days sight / date
_______ named place: ______________
We are prepared to furnish the following documents:
Latest Ship Date
All banking charges
in the U.S. are for the account of the _ seller ___ buyer
Issuing Bank should name a U.S. Reimbursing Bank
Your compliance with the above provisions is appreciated and will avoid unnecessary amendment fees.
Customer Name ____________________________________
Advising Bank’s Ref # _______________________________
Advising Bank Contact/Phone _______________________________________________
PO # ___________________________
THE LC TERMS
1. What is the full amount of the LC? _____________________________
2. Does the LC request confirmation? _____________________________
3. What is the tenor of the LC? _____________________________
(Period from issuance to expiration)
4. What is the tenor of the draft? _____________________________
(Payment terms - i.e. sight, 30 days from B/L, etc.)
5. What are the relevant dates? Are they all acceptable?
latest ship date: __________
presentation period: __________
7. What is the Incoterm? _____________ named place ______________
Does it agree with:
Transport document? ________________________
Freight charges collect or prepaid? ________________________
Ports of loading and discharge? ________________________
Insurance requirements? ________________________
8. Are the other docs acceptable/appropriate? ________________________
9. For what charges are we responsible? ________________________
10. Has the LC been circulated through sales, treasury / credit, production, traffic, etc. and to your forwarder?
11. Comments / issues / amendments req'd? ____________________________________________________________________________________________________________________________
Checked by: __________________________ Date: ___________________
whenever possible and teaches you to avoid future discrepancies
Example: $77k draft, 90 day BL terms, disc’t rate estimated by bank at 6.5%
$77,000 x 6.5% x 80/ 360 = $1,101
3. Issuing Bank sends the LC to Advising Bank, usually via SWIFT. After authenticating the LC, the LC is sent to beneficiary.
6. If documents comply w/ LC terms, Examining Bank claims reimbursement from Issuing Bank. If they confirmed the LC, the Examining/Confirming Bank pays the Exporter.
7. Issuing Bank examines documents, finds them in compliance and reimburses the Examining Bank. They debit the Importer’s account for payment and then deliver the docs to importer.
8. The exporter has been paid, the importer has their goods, the banks have been reimbursed, and the cycle is complete!
Vendor (2nd Bene)
Seller (LC Bene)
$75,000 transferSpecial Types of LCs
Exporter ships goods and routes documents through banks
-Outstanding balances on your LCs/Collections
-Transaction detail and history
-Monitor ship dates, expiration dates, fees, etc.
-Track and store information on payments, debits/credits
1. Know your trading partner
2. Don’t issue an LC or ship under an LC until both parties agree on all terms
3. Importers, have your int’l banker review your terms. Ask about other possible options.
4. Exporters, make sure you negotiate favorable LC terms BEFORE the LC is issued. Ask your int’l banker and forwarder for their input.
5. Don’t forget the KISS theory
6. Prepare documents carefully
7. Keep UCP 500 and Incoterms Guide available
8. Get your money’s worth! Select forwarders and bankers with solid trade finance experience
9. Have your forwarders and bankers keep you up to date. Keep them accountable.
10. Use a web-based system for efficiency and accuracy