Payment Methods and Finance for International Trade

Preface
Contents
About the Author
1 Introduction to International Trade
	1.1 Concept of International Trade
	1.2 Purposes of Engaging in International Trade
		1.2.1 To Increase Revenues and Profits: The Exporter’s Perspective
		1.2.2 To Use Production Capability Fully and Sell Excess Products: The Exporter’s Perspective
		1.2.3 To Learn or Acquire Advanced Technology: The Importer’s Perspective
		1.2.4 To Meet Domestic Demand: The Importer’s Perspective
	1.3 Features of International Trade
		1.3.1 Different Laws and Standards
		1.3.2 Government Control and Intervention
		1.3.3 Complex Documents
		1.3.4 Different Customs and Cultures
		1.3.5 Different Languages
		1.3.6 Different Currencies
		1.3.7 Long Distance
	1.4 Risks in International Trade
		1.4.1 Introduction
		1.4.2 Risk Factors
		1.4.3 Commercial Risk and Country Risk
	References
2 International Trade Contracts
	2.1 Concept of a Contract
	2.2 Formation of a Contract
		2.2.1 Requirements for the Formation of a Valid Contract
		2.2.2 The Process of Offer and Acceptance
		2.2.3 Information Included in an International Sale Contract
		2.2.4 Ordering Process
	2.3 Performance of a Contract
		2.3.1 Obligations
		2.3.2 Breach of Contract
		2.3.3 Various Examples of Contract
	References
3 Documents for International Trade
	3.1 Introduction
	3.2 Commercial Documents
		3.2.1 Transport Documents
		3.2.2 Commercial Invoices and Other Documents
		3.2.3 Specimen and Examples
	3.3 Financial Documents
		3.3.1 Bill of Exchange (Documentary Draft)
		3.3.2 Promissory Note
		3.3.3 Payment of Bill of Exchange and Promissory Note
	References
4 Overview of Payment Methods
	4.1 Introduction
	4.2 Basic Types of Payment Method
	4.3 Case Study for Respective Methods of Payment
		4.3.1 Payment in Advance (Cash in Advance)
		4.3.2 Open Account
		4.3.3 Documentary Collection
		4.3.4 Documentary Credit
	References
5 Payment in Advance (Cash in Advance)
	5.1 Introduction
	5.2 Operation of a Payment in Advance
		5.2.1 Telegraphic Transfer  (Bank Transfer, Wire Transfer)
		5.2.2 Credit Card
		5.2.3 Payment by Check
		5.2.4 Electronic Payment
	5.3 Advantages/Disadvantages
		5.3.1 Advantages/Disadvantages
		5.3.2 When to Use Payment in Advance
	References
6 Open Account
	6.1 Introduction
	6.2 Operation of an Open Account
	6.3 Features and Advantages/Disadvantages
		6.3.1 Features (Comparison with a Documentary Collection)
		6.3.2 Advantages and Disadvantages
	Reference
7 Documentary Collection
	7.1 Introduction
	7.2 Operation of a Documentary Collection
		7.2.1 Overview
		7.2.2 Parties to a Documentary Collection
		7.2.3 Documents Against Payment
		7.2.4 Documents Against Acceptance
		7.2.5 Collection Instruction
	7.3 Features and Advantages/Disadvantages
		7.3.1 Features
		7.3.2 Advantage/Disadvantage
	7.4 The Uniform Rules for Collections
	References
8 Documentary Credit
	8.1 Introduction
		8.1.1 The Background
		8.1.2 History
		8.1.3 Concept
	8.2 Operation of a Documentary Credit
		8.2.1 Flow of a Documentary Credit Transaction
		8.2.2 Application and Issuance of a Documentary Credit
		8.2.3 Responsibilities of the Advising Bank
		8.2.4 Presentation of Documents
		8.2.5 Advantages/Disadvantages
	8.3 Various Types of Credits
		8.3.1 Basic Types of Credit Under UCP
		8.3.2 Other Forms of Credit
	8.4 Independence Principle and the Fraud Exception
		8.4.1 Independence Principle
		8.4.2 Complying Presentation and Strict Compliance
		8.4.3 Fraud Exception
	8.5 Issuing a Documentary Credit Through SWIFT
	References
9 UCP and Letter of Credit Examples
	9.1 UCP
		9.1.1 History of the UCP
		9.1.2 Basic Concepts
		9.1.3 Major Clauses of UCP 600
	9.2 Examples of Letters of Credit
		9.2.1 Example by SWIFT MT700 Codes
		9.2.2 Example 2 Documentary Credit Advice
		9.2.3 Example 3 Documentary Credit Advice
	References
10 Other Payment Methods
	10.1 Bank Payment Obligation
		10.1.1 Introduction
		10.1.2 Basic Assumptions and Definitions
		10.1.3 Some Basic BPO Definitions
		10.1.4 Operation of Bank Payment Obligation
		10.1.5 Advantages of Bank Payment Obligation
		10.1.6 Comparison with a Documentary Credit (Letter of Credit) and an Open Account
	10.2 Consignment
		10.2.1 Introduction
		10.2.2 Operation of Consignment
	10.3 Netting
	References
11 Independent Guarantee (Demand Guarantee)
	11.1 Introduction
		11.1.1 Overview
		11.1.2 Concept
		11.1.3 Standby Letter of Credit and Surety Bond
	11.2 Types of Independent Guarantees
		11.2.1 A Direct Guarantee and an Indirect Guarantee
		11.2.2 Performance Guarantee and Payment Guarantee
		11.2.3 Various Types of Performance Guarantee (Performance Type Guarantee)
	11.3 Independence Principle and Fraud Exception
		11.3.1 The Independence Principle
		11.3.2 The Fraud Exception
	11.4 Examples of Independent Guarantees
		11.4.1 Example Tender Guarantee (Bid-Bond)
		11.4.2 Example Performance Guarantee (In the Form of Indirect Guarantee/Counter Guarantee Type)
		11.4.3 Example Performance Guarantee (P-Bond)
		11.4.4 Example Standby Letter of Credit (For an AP-Bond)
		11.4.5 Example Refund Guarantee in a Shipbuilding Contract
		11.4.6 Example Payment Guarantee
	11.5 Comparison of and Key Distinctions Between a Documentary Credit and a Standby Letter of Credit
	References
12 Trade Finance for International Sale of Goods
	12.1 Introduction
		12.1.1 Concept of Trade Finance
		12.1.2 Overview of Types of Trade Finance
		12.1.3 The Bank’s Role in International Trade
	12.2 Export Working Capital Financing for Pre-shipment
		12.2.1 Export Working Capital Financing
		12.2.2 Export Credit Guarantee Programmes for Pre-shipment Finance
	12.3 Negotiation (Or Purchase) of Bills of Exchange
		12.3.1 Introduction
		12.3.2 Operation
		12.3.3 Negotiation in a Documentary Credit Transaction
		12.3.4 Negotiation in a Documents Against Acceptance Transaction
	12.4 Export Factoring
		12.4.1 Concept
		12.4.2 Operation of Export Factoring
		12.4.3 Advantages/Disadvantages of Export Factoring
	12.5 International Forfaiting
		12.5.1 Concept
		12.5.2 Operation of International Forfaiting
		12.5.3 Advantages/Disadvantages of International Forfaiting
	References
13 Finance for Overseas Construction
	13.1 Introduction
	13.2 Supplier Credit and Buyer Credit
		13.2.1 Supplier Credit
		13.2.2 Buyer Credit
	13.3 Project Finance
		13.3.1 Concept
		13.3.2 Features of Project Finance
	13.4 Syndicated Loans
	References
14 Export Credit Insurance or Guarantee
	14.1 Introduction
	14.2 Functions of Export Credit Insurance (Or Guarantee)
	14.3 Main Types of Export Credit Insurance (Or Guarantee)
		14.3.1 Overview
		14.3.2 Short-Term Export Credit Insurance (Or Short-Term Export Credit Guarantee)
		14.3.3 Medium and Long-Term Export Credit Insurance
		14.3.4 Export Bond Insurance (Bond Insurance)
		14.3.5 Export Credit Guarantee (Or Working Capital Loan Guarantee) for Pre-shipment Finance
	References
Index