International trade settlement, the foreign exchange between the parties of two different countries, whether between individuals, between units, between enterprises or between governments, needs to be handled through banks for the sale of commodities, service supply, capital allocation, and international lending. The receipt and payment business is called international settlement. International trade often occurs out-of-loan settlement to settle the creditor's rights and debts between buyers and sellers, which is called international trade settlement. It is a settlement based on the two settlements of commodity trading goods and foreign exchange, also known as tangible trade settlement. It is a non-cash settlement system based on bills, conditions on documents, banks as the hub, and a combination of settlement and financing. Our company can act for unqualified companies to complete international trade settlement, including letter of credit L/C, wire transfer T/T, U.S. dollar foreign exchange receipt and payment, etc.
Trade settlement method：
1. Letter of Credit L/C
Letter of Credit L/C refers to a written certificate issued by the bank to the exporter (seller) to guarantee the payment of the goods at the request of the importer (buyer). In the letter of credit, the bank authorizes the exporter to use the bank or its designated bank as the payer to issue a bill of exchange not exceeding the specified amount, and to attach shipping documents as required, and to specify the specified amount on time. The location collects the payment.
The general procedure for payment by letter of credit is:
(1) The parties to the import and export parties should clearly stipulate the use of letter of credit for payment in the purchase and sale contract.
(2) The importer submits an application for issuance to the bank where it is located, fills in the application for issuance, and pays a certain deposit for issuance or provides other guarantees, and asks the bank (issuing bank) to issue a letter of credit to the exporter.
(3) The issuing bank shall issue a letter of credit with the exporter as the beneficiary according to the content of the application, and notify the exporter of the letter of credit through its correspondent bank or correspondent bank (collectively referred to as the advising bank) in the place where the exporter is located.
(4) After the exporter ships the goods and obtains the shipping documents required by the letter of credit, he shall negotiate the payment with his local bank (which may be the advising bank or other banks) in accordance with the provisions of the letter of credit.
(5) After the negotiating bank has negotiated the payment, the negotiated amount shall be indicated on the back of the letter of credit.
2. Wire transfer T/T
Wire transfer is a payment in which the payer deposits a certain amount of money in the remittance bank, and the remittance bank sends it to the destination branch or correspondent bank (remittance bank) by telegram or telex, and instructs the remittance bank to pay a certain amount to the beneficiary. Way.
When wire transfer, the remitter fills in the remittance application form, and indicates in the application that the wire transfer T/T method is used. At the same time, send the remittance and the required fees to the outbound bank to obtain the wire transfer receipt. After receiving the remittance application, the remitting bank should carefully review the application and contact the remitter if it is unclear in order to prevent delays or accidental losses of the remitted funds due to errors in the application.
When the remitting bank handles the wire transfer, it shall issue a payment settlement instruction to the remitting bank by telegram or telex according to the content of the remittance application form. The content of the message mainly includes: remittance amount and currency, beneficiary's name, address or account number, remitter's name, address, postscript, position allocation method, remittance bank name or SWIFT system address, etc. In order for the remitting bank to verify that the content of the message was indeed sent by the remitting bank, the remitting bank should add the testkey agreed upon by the banks of both parties before the text.
After receiving the telegram or telex, the remitting bank will check whether the secret detention matches. If they match, a wire transfer notice will be prepared and the beneficiary will be notified to withdraw the money. The beneficiary withdraws the money from the remittance bank with the notice in two copies, and after signing the beneficiary's receipt, the remittance bank can use it to settle the remittance. In practice, if the beneficiary has an account at the remittance bank, the remittance bank often does not prepare a remittance notice, and only sends the money to the beneficiary’s account by text, and then gives the beneficiary a receipt notice. There is no need for the payee to sign a receipt. Finally, the remitting bank sends a Debit Advice to the remitting bank.
The telegraphic fee in the wire transfer is borne by the remitter. Banks generally handle wire transfers on the same day and do not occupy the remittance funds in the postal process. Therefore, for large amounts of remittances or through SWIFT or inter-bank transfers, wire transfers are mostly used.
Penghai Service Content：
International trade settlement agent: foreign exchange collection for export, foreign exchange payment for import, and letter of credit payment
