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The UCP Internet Trade Finance Workshop Training Workshop for trade finance professionals. Text: “The First Internet Trade Transaction Manual for Global Commerce” Uniform Customs and Practice for Documentary Credits UCP 600, 2007 Revision Title e InterNetLC.com ™ ENGLISH TABLE CONTENTS
Topics and Sections: 1. The Global Trade Business Model 11. Incoterms 2. Letters of Credit 12. UCP 600 3. Assignment of Proceeds 13. eUCP 600 4. Transferable Letters of Credit 14. eTrade Finance Platform 5. Negotiable Electronic Records 15. eTrade Action Maps 6. Standby Letters of Credit 16. eTrade Functions 7. Documentary Collections 17. Export Transaction Financing 8. Open Account Transactions 9. Bills of Exchange a. Example Transactions 10. Global Trade Credits Contents at a Glance TABLE CONTENTS e InterNetLC.com ™
The Global Business Model Business systems and documents understood worldwide . Global Trade Business Model TABLE CONTENTS e InterNetLC.com ™
Global Trade Business Model Invoice The Global Business Model - Concept Letter of Credit The global understanding of commercial documents, customs and procedures. Bill of Lading Packing List TABLE CONTENTS e InterNetLC.com ™
The Global Business Model Global Trade Business Model – A business process for conducting trade that is defined by globally recognized trade forms and documents. Trade – The exchange of tangible goods or services between a seller and a buyer in another country for cash, acceptance or other goods. Trade Finance – The settlement (reimbursement for title) of a trade transaction with a Documentary Letter of Credit, Standby Letter of Credit, Documentary Collection or Bill of Exchange, through the international banking system. Global Trade Business Model TABLE CONTENTS e InterNetLC.com ™
Global Trade Business Model The Trade Process - Concept 1. Sale 3. Logistics 4. Settlement Seller Buyer 2. Performance TABLE CONTENTS e InterNetLC.com ™
The Trade Process
Sale – Finding the buyer and/or seller leading to a Purchase Order.
Performance – Manufacturing or staging the goods for shipment.
Logistics – Moving the goods from the export to the import country.
Settlement – Exchanging title to the goods from the seller to the buyer.
Global Trade Business Model TABLE CONTENTS e InterNetLC.com ™
1. The Sale Phase Source Products – Catalogs, Internet, trade shows, contacts. Basic Ordering Agreement – Contacts, addresses, terms and conditions. Request for Quotation – Request for prices, delivery, specifications … Quotation – Specific as to price, quantity, delivery, Incoterm … Purchase Order – Contractual agreement for price, quantity and terms. Purchase Order Acknowledgement – Acceptance of the Purchase Order Global Trade Business Model TABLE CONTENTS e InterNetLC.com ™
2. The Performance Phase Global Trade Business Model
The Seller is obligated to produce the goods and services contained in the accepted Purchase Order and/or Letter of Credit.
Performance is evidenced for title transfer by:
Evidence of Movement – Bill of Lading and Air Waybill
Evidence of Value – Commercial Invoice
Evidence of Content – Packing List
Evidence of Compliance – Inspection Certificate
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3. The Logistics Phase Logistics – The movement of goods from one country to the other. Global Trade Business Model Importer Exporter Carriage Loading F/Forwarder Carrier Un-Loading Customs Carriage F/Forwarder TABLE CONTENTS e InterNetLC.com ™
4. The Settlement Phase
International Payment Methods
Documentary Letter of Credit – Payment at shipment.
Documentary Trade Credit – Payment at shipment.
Documents Payment – Payment upon delivery.
Documents Acceptance – Acceptance upon deliver.
Clean Collection – Cash in advance of shipment.
Open Account – Payment upon presentation of invoice.
Global Trade Business Model TABLE CONTENTS e InterNetLC.com ™
Basic Payment Methods Global Trade Business Model TABLE CONTENTS e InterNetLC.com ™ Reliance of Buyer Upon arrival Buyer’s Discretion Open Account Non-payment, goods with Buyer When Draft is accepted Trade Draft Matures D/A Collection Non-payment, goods returned. When payment made Presenting Bank D/P Collection Minimal to Seller At acceptance of draft Maturity of B/A Usance LC Minimal to Seller When LC is paid Presentation of Docs Sight LC None to Seller At Destination Before Shipment Clean Collection Risk Goods Available Timing Payment Method
The Settlement Process - Documents Proforma Invoice – Estimate of planned invoice after shipment Letter of Credit Instructions – Terms and Conditions for the Letter of Credit Letter of Credit Application – Application to the Buyer’s bank Documentary Letter of Credit – Credit issued by the Buyer’s bank Letter of Credit Advice – Advise of Credit to the Seller Export License – Seller’s export license if required Shipper Letter of Instructions – Seller’s shipping and document instructions. Global Trade Business Model TABLE CONTENTS e InterNetLC.com ™
The Settlement Process – Documents (continued) Packing List – Actual contents of shipment Commercial Invoice – Value of the goods and services Certificate of Origin – Evidence of the origin of the goods Beneficiary’s Certificate –Statement that a requirement is true or accomplished Quality Certificate – Seller’s or third party statement of quality compliance Certificate of Insurance – Cargo Insurance amounts and conditions Ships Register Certificate – Age and register of cargo carrying vessel. Bill of Exchange – Demand for payment Global Trade Business Model TABLE CONTENTS e InterNetLC.com ™
The Settlement Process – Transport Documents (continued) Bill of Lading – Ocean or Marine Bill of Lading Air Waybill – Air Waybill or Consignment Note for air shipment Rail Waybill – Rail Waybill for rail shipment Truck or Straight Waybill – Truck Waybill for truck shipment Courier Receipt – Expedited delivery service by air courier. Global Trade Business Model TABLE CONTENTS e InterNetLC.com ™
Global Trade Business Model The Global Trade Business Model provides guidelines, customs and procedures for doing business worldwide. The Model is codified as individual trade documents and trade finance instruments that are universally recognized by buyers, sellers, freight forwarders, carriers and trade banks. Global Trade Business Model - Summary TABLE CONTENTS e InterNetLC.com ™