商务英语课件Unit10InternationalPayments10.ppt

1、 Learning Objectives Understanding the main modes of payment in international trade Negotiating terms of payment Writing a letter asking for L/C amendments U N I T 1 0 国际支付T e r m s Speaking Task Warm-up Practice Listening Task Follow-up Practice Writing Task Reading Task S p e a k i n g T a s k Wa

2、r m-u p P r a cWe need to discuss some questions about what we are going to learn in this unit.Sure,thatll help us understand better about what we are asked to do.Wa r m i n g-u p P r a c t i c e We n e e d t o 1.The terms of payment are an important part of the sales contract both sellers and buyer

3、s are concerned about.Now store the words and phrases that are associated with payment terms and then explain or describe these terms.letter of creditPayment Terms1.T h e t e r m s o f p a y m e n t a r e a n 2)Discuss the following questions.1)What are the main contradictions that exist between sel

4、lers and buyers in international payment?2)What are both sellers and buyers concerned about in negotiating payment?3)What are the commonly used methods of payment in international trade?Can you tell the advantages and disadvantages of each for both sellers and buyers?2)D i s c u s s t h eIntroductor

5、y Remarks The terms of payment are an important part of the business contractFrom the sellers point of view,the best terms would be full payment in cash at the time of sale，while the buyers would prefer to have the goods before making paymentImporters and exporters are separated from each other by t

6、housands of milesThis adds to the difficulties of coming to an agreement on how payment should be madeThe exporters and importers usually meet each other half way and agree to payment by letter of credit opened by a reliable bankA letter of credit is a bankers guarantee that payment will be made on

7、presentation of all the required shipping documents.In this way，the sellers or exporters receive a guarantee not only from the buyers or importers,but also from a banker that payment will be made on delivery of the goodsOn the other hand,the buyers or importers are given the guarantee that the banke

8、r will not make payment unless the shipping documents are presentedI n t r o d u c t o r y R e m a r k s Main Modes of Payment in International Trade I.Remittance A.Mail Transfer(M/T)B.Telegraphic Transfer(T/T)C.Demand Draft(D/D)II.Collection A.Clean Bill for Collection B.Documentary Bill for Collec

9、tion 1.Document against Payment(D/P)(1)D/P at sight (2)D/P after sight D/P T/R 2.Document against Acceptance III.Letter of Credit(L/C)Ma i n Mo d e s o f P a y m e n t i n I n t eUnderstanding Letters of CreditDo you know that 50%of L/C documents presented to banks are rejected?This costs you dearly

10、,in extra bank charges,your wasted time and the customer dissatisfaction.Key ContentsvWhat is a letter of credit?vLearn the differences between different types of L/Cs and when to use them.vDiscover which are the most usual types of L/C-Sight,Deferred Payment,Transferable,Standby.U n d e r s t a n d

11、 i n g L e t t e r s o f C r e d iApplicant（Importer）Beneficiary（Exporter）1 S/C Paying bank Issuing bankAdvising bank Negotiating bank8 Paying the money for documents2 L/C application4 Credit advice5Presenting documents for negotiation3 Issuing L/C6 Recourse 7 Reimbursement Performance of L/CA p p l

12、 i c a n t B e n e f i c i a r y 1 S/C P a商务英语课件U n i t 1 0 I n t e r n a t i o n a l P a y m e n t s 1 0 p p tDifferent Types of Letters of Creditv1.According to the attaching of documents 1)Clean credit 2)Documentary creditv2.According to the revocability of credit 1)Revocable credit 2)Irrevocable

13、 creditv3.According to the transferability of credit 1)Transferable credit 2)Non-transferable creditv4.According to the adding of confirmation 1)Confirmed credit 2)Unconfirmed creditv5.According to the time of payment 1)Sight credit 2)Usance or time creditv6.According to the method of payment 1)Paym

14、ent credit 2)Deferred payment credit 3)Acceptance credit 4)Negotiation credit v7.According to the credit amount to be used revolvingly 1)Automatic 2)Semi-automatic 3)Non-automatic v8.Other credits 1)Red clause credit 2)Back to back credit 3)Reciprocal credit 4)Standby credit D i f f e r e n t T y p

15、e s o f L e t t e r s o f Identify the following letters of credit 1.Deferred L/C is a credit available by deferred payment,under which payment must be effected on a specified future date.2.Red Clause L/C is one with a clause inserted into the credit authorizing the negotiating bank to make an advan

16、ce of the amount under the credit,whole or part,to the beneficiary.3.Transferable L/C The beneficiary is entitled to ask the bank to transfer L/C rights partially or wholly to a third party.This is used for direct financing of supplies,where the selling party is not the direct producer but is an int

17、ermediary.4.Revolving L/C The underlying L/C amount is renewed during the life of the L/C according to pre-defined terms and conditions.It is advantageous for contracts with repeated goods deliveries.Revolving L/C Transferable L/C Clean L/C Sight L/C Deferred L/C Irrevocable L/C Red clause L/C Confi

18、rmed L/CI d e n t i f y t h e f o l l o w i n g l e t t e r sv5.Clean L/C is a credit under which payment will be effected only against a draft without any shipping documents attached thereto or sometimes,against a draft with an invoice alone attached thereto.v6.Irrevocable L/C is a credit that cons

19、titutes a definite undertaking of the issuing bank and can be amended or cancelled by the issuing bank only on condition that all parties concerned.v7.Confirmed L/C is a credit that is advised to the beneficiary with another banks confirmation added thereto.v8.Sight L/C calls for the presentation of

20、 sight drafts,under which the beneficiary(the drawer)is entitled to receive payment at once on presentation of his draft to the drawee bank or to the issuing bank if drawn on the issuing,once the relevant documents have been checked and found to be in order.5.C l e a n L/C i s a c r e d i t u n d e

21、rAdvantages&Disadvantages of a Letter of Credit vAdvantages to the Exporter Shifts credit risk from the Importer to the Importers Bank(Issuing Bank).An undertaking from the Issuing Bank that payment will be made under the Letter of Credit,provided that you meet all terms and conditions of the Letter

22、 of Credit.If the Letter of Credit is not issued as agreed,you are not obligated to ship against it.vDisadvantages to the Exporter Documents must be prepared in strict compliance with the requirements stipulated in the Letter of Credit.Non-compliance leaves you exposed to risk of non-payment and rem

23、oves the protection afforded by the Issuing Bank since the final decision on the documents then rests with the Importer.A d v a n t a g e s&D i s a d v a n t a g e s o f Advantages and Disadvantages of Documentary CollectionvThe major advantage of a cash against documents payment method for the Buye

24、r is the low cost,versus opening a Letter of Credit.The advantage for the Seller is that he can receive full payment prior to releasing control of the documents,although this is offset by the risk that the Buyer will,for some reason,reject the documents(or they will not be in order).Since the cargo

25、would already be loaded(to generate the documents),the Seller has little recourse against the Buyer in case of non-payment.A payment against documents arrangement involves a high level of trust between the Seller and the Buyer and should be adopted only by parties well known to each other.A d v a n

26、t a g e s a n d D i s a d v a n t a g e s oRisks in Documentary CollectionsvFor the Exporter If it is a sight draft,the exporter will reduce the risk of non-payment but will not eliminate it totally since the importer may not be in a position to pay for the goods or may not be able to procure suffic

27、ient foreign exchange to make the payment.In this case the exporter may be forced to either call back the goods or negotiate sale to some other interested party,which may be at a reduced rate.In the case of term draft,the risk to the exporter is higher since the foreign buyer will take possession of

28、 the goods and may not pay at due date,forcing therefore the exporter to try and collect payment from the foreign buyer in the foreign buyers home country.vFor the Importer The importer faces the risk of paying for goods of sub-standard quality or even with shortages.In such a circumstance,it would

29、take some time to get refunds from the exporter.It could also happen that the exporter refuses to make refunds,leading the importer to lengthy legal proceedings.R i s k s i n D o c u m e n t a r y C o l l e c t i oWhen to use Documentary Collections?Since Documentary Collections transactions entail

30、some measure of trust,it is advisable to use the mechanism when the following conditions apply:When the exporter and importer have a well established relationship When there is little or no threat of a total loss resulting from the buyers inability or refusal to pay When the foreign political and ec

31、onomic situation is stable When a letter of credit is too expensive or not allowed Wh e n t o u s e D o c u m e n t a r y C o l l e c商务英语课件U n i t 1 0 I n t e r n a t i o n a l P a y m e n t s 1 0 p p tIn this part you will listen to a conversation about modes of international payment,and a passage

32、about letter of credit.Try to finish the exercises while listening.Are you ready?L i s t e n i n g T a s k I n t h i s p a r t y o u 10.1.1 Listen to the dialogue about the modes of international payments and fill in the tree according to what you hear in the dialogue.M/TT/TD/DD/AD/P Sight L/C Time

33、L/Cremittancecollectionletter of creditModes of International PaymentIrrevocable L/CRevolving L/C 1 0.1.1 L i s t e n t o t h e d i a l o g 10.1.2 Listen to the following passage and fill in the missing parts.A letter of credit,also referred to as an L/C,is a payment term generally used for internat

34、ional sales transactions.It is basically a mechanism,which allows importers to offer secure terms of payment to exporters in which a bank(or more than one bank)gets involved.At the very outset one must understand that letters of credit deal in documents,not goods.The idea in an international trade t

35、ransaction is to shift the risk from the actual buyer to a bank.Thus a letter of credit is a payment undertaking given by a bank to the seller and is issued on behalf of the applicant i.e.the buyer.The buyer is the applicant and the seller is the beneficiary.The bank that issues the L/C is referred

36、to as the issuing bank which is generally in the country of the buyer.The bank that advises the L/C to the seller is called the advising bank which is generally in the country of the seller.The specified bank makes the payment upon the successful presentation of the required documents by the seller

37、within the specified time frame.Note that the bank scrutinizes the“documents”and not the“goods”for making payment.Thus the process works both in favor of both the buyer and the seller.The seller gets assured that if documents are presented on time and in the way that they have been requested on the

38、L/C the payment will be made and buyer on the other hand is assured that the bank will thoroughly examine these presented documents and ensure that they meet the terms and conditions stipulated in the L/C.1 0.1.2 L i s t e n t o t h e f o lIn this part you are going to read two conversations in pair

39、s and then you will be asked to answer some questions about what you have read.Please read louder!S p e a k i n g T a s k I n t h i s p a r t y o u 10.2.1 Read the dialogue and then answer the following questions.1)What is Mr Songs usual terms of payment with his customers?Confirmed,irrevocable lett

40、er of credit against presentation of sight draft.2)What payment terms did Mr Brown propose?D/A against presentation of time draft or term documentary credit.3)Did Mr Song agree to accept Mr Browns payment terms?What did he say?No.He said their capital would be tied up for several months after they e

41、ffected shipment 4)What was Mr Browns proposed number of days after sight or term documentary credit?90 days5)What was Mr Browns explanation?Because of the size of this order,they might not be able to make full payment till the end of the fiscal year.The current economic downturns in the U.S.and oth

42、er existing factors had drained their cash flow to the limit.6)What payment terms did Mr Song accept in the end?He made a concession by accepting D/P at sight for half the total payment,and deferred payment credit at 90 days for the remaining balance1 0.2.1 R e a d t h e d i a l o g u e a n d t1)Wha

43、t was Mr Zhangs proposal on terms of payment?vConfirmed,irrevocable letter of credit payable against shipping documents.2)Why was Mr Stone against paying by letter of credit?vPaying by letter of credit was really troublesome and cost him a lot.3)Why did Mr Zhang insist L/C should be used?vBecause a

44、confirmed and irrevocable letter of credit allows exporters the additional protection of the bankers guarantee.4)What was Mr Stones proposal?v50%by L/C and the balance by D/P.5)What was their final conclusion?vPayment by L/C at sight.6)When should Mr Stone open the covering L/C?v He should open the

45、L/C early in May,about 30 days before the time of shipment.10.2.2 Read the dialogue and then answer the following questions1)Wh a t w a s Mr Z h a n g s p r o p o sR e a d i n g T a s k 1)Which method of payment would you choose for international transactions?And why?2)What kind of services can a ba

46、nker offer to you in international transactions?How do they help you?3)What do you think are the main risks that are involved in international trade payment for both an exporter and a banker?PRE-READING QUESTIONS FOR PAIR WORK P R E-R E A D I N G Q U E S T IQuestions1)Why has international trade alw

47、ays been considered“low risk”by banks?Compared with other forms of bank lending,financing trade transactions is popular because these deals are short term,self liquidating,secured(by the underlying goods)and speedily completed.2)What kind of risks does a bank face in financing international transact

48、ions?There are three main areas of risk micro risks,macro risks,and product risks.3)To avoid fraud,what should a lending banker to the importer consider?Before undertaking to establish a DC for an importer,the bank should consider the financial standing of the importer,the goods and the status of th

49、e exporter(or beneficiary of the DC.4)What is one of the greatest services a bank can do for its exporter in advising the DC it receives from an overseas bank?Check carefully whether the DC is workable and that the exporter will be able to comply with its terms and conditions.5)How does this article

50、 enlighten you as an importer/exporter?(Open)Q u e s t i o n s1)Wh y h a s i n t e r n a t iIn this part you are going to learn how to check letter of credit and write letters for L/C amendment.Wr i t i n g T a s kL/C Amendment If payment of export trade is made by letter of credit,the seller,on rec