CH 7 - Chapter7 Chapter7 Tradepaymentand Finance...

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Chapter 7 Chapter 7 Trade payment and  Finance  
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2. Informal Payment Mechanisms 2.1 Payment in Advance     It require the buyer-importer to remit  payment in full before receiving the  goods it orders from the seller-exporter. It  is the safest alternative for the exporter. 1. Introduction
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2.2 Open account     This is the flip-side of the payment in  advance situation, as now maximum risk  lies with the seller-exporter.
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3. Formal Payment Mechanisms 3.1 Drafts and Bills of Exchange The history of the draft Parties to a Draft Drawer Drawee Acceptor Payee Endorser The Geneva Convention
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3.2 Collections The collection process Bill of lading Invoices Insurance policy Customs certificates Draft Collection  order Buyer’s  bank Buyer pays  document (D/P) or  accepts the  commitment to pay  in the future(D/A) Buyer’s  bank Sends either immediate payment  back to seller (D/P) or accepted  draft back to seller to await maturity  date and future payment (D/A)
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Clean collection     The remitting bank present the draft to  the drawee/acceptor and no other  documents accompany the draft.
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Documents against Payment (D/P) D/P    The buyer will be given the hipping  documents in return for payment against the  draft. URC522 Documents against Acceptance (D/A) D/A    It relate to time draft and term bills.
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3.3 Letters of Credit/Documentary  Credits Operation of a Documentary Letter of Credit
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Parties to a Letter of Credit Advising bank Applicant Beneficiary Confirming bank Issuing bank
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Types and Conditions of Letters of Credit Types of Letters of Credit Documentary vs. Standby Irrevocable vs. Revocable Confirmed vs. Unconfirmed Transferable Credit Back-to-Back Credit General Conditions
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CH 7 - Chapter7 Chapter7 Tradepaymentand Finance...

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