Professional Documents
Culture Documents
Learning Objectives
What are the key elements of an import or
export transaction?
What are the three key documents in import
or export transactions?
What are some private sector export financing
sources?
What are some public sector export financing
sources?
Elements of an Import/Export
Transaction
Prices
price quotations and terms in the contract should conform to
published catalogues.
Documents
provides shipping and delivery instructions
Documentations in
Import/Export Transactions
Commercial invoice
issued by the exporter and contains
a precise description of the
merchandise.
Insurance documents
must be as specified in the contract
of sale and must be issued by
insurance companies or their
agents.
Consular invoices
Packing lists
may be required so that the
contents of containers can
be identified
Price
Export
Goods
Documents
Goods
Cash
Quote
contract
are
are
are
settlement
request
signed
shipped
accepted
received
of the
transaction
Negotiation
Backlog
Documents are
presented
Financing Period
Documentation of Foreign
Trade Transactions
Key Documents
Letter of Credit
Bill of Lading
Draft
Function
Risk of noncompletion
Foreign exchange rate
risk
Financing foreign trade
Advantages of L/Cs:
it reduces risk of default
a confirmed L/C helps secure financing
Disadvantages of L/Cs:
the fees charged
reduces the available credit of the importer
Beneficiary
(exporter)
Applicant
(importer)
Bill of Exchange
Bank draft
Buyers bank is drawee of draft
Negotiable Instruments
Types of Drafts
Sight drafts
which is payable on presentation to the drawee.
Time drafts
which allows a delay in payment.
it is presented to the drawee who accepts it with a
promise to pay at some later date.
When a time draft is drawn on a bank, it becomes a
bankers acceptance.
When drawn on a business firm it becomes a trade
acceptance.
Bankers Acceptance
When
Exporter
Bill of Lading
A straight B/L
provides that the carrier deliver the merchandise to the
designated consignee only.
An order B/L
directs the carrier to deliver the goods to the order of a
designated party, usually the shipper.
Discounting
Converting a trade draft into cash.
Factoring
Selling export receivables at a discount to a factor.
Expensive but may be of great value to the occasional
exporter.
Forfaiting
Discounting at a fixed rate without recourse of mediumterm export receivables denominated in fully convertible
currencies.
Export-Import Bank
Known as the Eximbank, it facilitates the financing of US
exports through various loan guarantee and insurance
programs.