1. Chapter 8: International Payments & Settlement

2. 1. Introduction (1)
Definition for international payments & settlements
Basic points for attention in international payments and settlements
As a rule, international traders would pay or receive freely convertible currencies.
Time of payment can be different in international payments and settlements as the case may be.
Method of payment can be different in international payments and settlements includes: remittance, collection, letter of credit and bank guarantee.
Foreign exchange control is being enforced in all the socialist countries, most developing countries, or even a few developed countries.
International traders should be aware that legal title to the exported goods passes from the exporter to foreign buyer by means of documentation.

3. 1. Introduction (2)
Features of Modern International Payments and Settlements
Convenient
Diversify
Effective

4. 2. Credit Instruments (1) Definition
A credit instrument is a written or printed paper by means of which funds are transferred from one person to another.
Bill of exchange, promissory notes, cheques
Functions of Negotiable Instrument
As a means of payments
As a credit instrument
As a negotiable instrument

5. 2. Credit Instruments (2) Parties to a Negotiable Instrument
Drawer (出票人）
Drawee （付款人）
Payee （收款人）
Acceptor （承兑人）
Endorser （背书人）
Endorsee （被背书人）
Acceptor for honour （参加承兑人）
Guarantor （保证人）
Holder （持票人）
Holder for value （付对价持票人）
Holder for due course （正当持票人）

6. 3. Bill of Exchange (1) Definition
It is an unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to or to the order of a specified person or to bearer.

7. Introduction Bill of Exchange, Draft Concept and content
Payment Order
Amount
Time of Payment
Place of Payment
Drawee, Payer
Payee
Time of Date
Place of Date
Signature of Date

8. 3. Bill of Exchange (3) Acts of a Bill of Exchange Issue (出票）
Endorsement（背书）
Presentment （提示）
Acceptance （承兑）
Payment （付款）
Dishonour （拒付）
Notice of Dishonour （拒付通知书）
Protest （抗议）
Right of recourse （追索权）

9. Kinds of bill of exchange
Banker’s Draft & Commercial Draft
Clean Bill & Documentary Bill
Sight Draft & Time Bill or Usance Bill
At ** days after sight
At ** days after date
At ** days after date of Bill of Lading
Fixed Date

10. Using Issue Presentation Acceptance Payment
Pay A Co. only / Pay ** Co. not negotiable
Pay ** Co. or order / Pay to the order of ** Co.
Pay Bearer
Presentation
Acceptance
Payment
Endorsement: Endorsee and Endorser / Discount
Dishonor
Dishonor by non-acceptance and Dishonor by non-payment
Protest
Right of Recourse
Without Recourse

11. 4. Promissory Note and Cheque (1)
Definition
Features of a Promissory Note
It is an unconditional promise in writing
The basic parties to a promissory note are the maker and the payee.
There is no need to accept the instrument if it is payable at a fixed or determinable future time.
Issued by bank

12. 4. Promissory Note and Cheque (2)
Definition
Features of Cheque
Unconditional
Be drawn on a bank
A sum certain in money must be written on a cheque
The date of a cheque is not essential
The payee may be a bearer, a specific person or his order
Crossing on Cheque

13. Three often used ways of payment
remittance
collection
Letter of Credit

14. 5. Remittance Definition Ways of Transfer Methods of Reimbursement
By airmail (M/T)
By cable/telex/SWIFT (T/T)
By banker’s demand draft (D/D)
Methods of Reimbursement

15. 6. Terms and Methods of Payment in international Trade Payment in Advance, Open Account Business, Collection (1)
Payment in Advance
Definition
It is to transfer the payment before delivery of the goods from the importer to the exporter through banks.
(by cheque, banker’s draft, mail transfer, telegraphic transfer, SWIFT message, international money order)

16. 6. Terms and Methods of Payment in international Trade Payment in Advance, Open Account Business, Collection (2)
Open Account Business
Collection
Outward collection
Inward collection
Types of collections
Clean collections
Documentary collections (D/P, C.A.D., D/A)

17. 7. Letter of Credit (1) Definition Parties to a Letter of Credit
Applicant or opener
Beneficiary
Issuing bank or opening bank
Advising bank
Confirming bank
Negotiating bank
Paying bank
Accepting bank
Reimbursing bank

18. 7. Letter of Credit (2) Contents of a Letter of Credit P78
Classification of Letter of Credit
According to the attaching of documents
According to the revocability of credit
According to the adding of confirmation
According to the time of payment
According to the method of payment
According to the credit amount to be used revolvingly
Other credits

19. Parties to a Letter of Credit
Applicant
Issuing Bank
Advising Bank/Notifying Bank
Beneficiary
Negotiating Bank
Paying Bank

20. Applicant It is usually up to the importer to choose a
commercial bank that is willing to open a letter of
credit on his behalf. In international business, the
applicant is often referred to as the buyer, opener or consignee(收货人).

21. Issuing Bank
It is the bank that issues the letter of credit on behalf of the applicant. It takes full responsibility for payment if the exporter presents the correct documents.

22. Advising Bank/Notifying Bank
(通知行): It is the bank that advises the beneficiary of the arrival of the letter of credit.

23. Beneficiary
It is the party in whose favor the letter of credit is issued.

24. Negotiating Bank
(兑现银行，票据转让银行): It refers to the advising bank that is willing to buy the full set of shipping documents presented by the exporter.

25. Paying Bank
It refers to the bank that pays the amount of money to the exporter as stipulated in the letter of credit.

26. 8. Guarantee Definition Classification of Guarantee
Tender guarantee, tender bond, or bid bond
Performance guarantee or performance bond
Repayment guarantee
Advance payment guarantee
Loan guarantee

27. 9. Documents (1) Bill of lading Definition
The functions of a bill of lading are:
It serves as a receipt
It forms the evidence of a contract for delivery
It is a negotiable document of title to the goods

28. 9. Documents (2) Main types of bill of lading Insurance Document
Shipped on board bill of lading
Received for shipment bill of lading
Clean or unclaused bill of lading
Claused or unclean bill of lading
Insurance Document
Commercial Invoices
Other Documents

29. Comprehension questions (Page 87)