GBM - InterNetLC.com - eTrade Finance Platform
Upcoming SlideShare
Loading in...5
×
 

GBM - InterNetLC.com - eTrade Finance Platform

on

  • 1,327 views

 

Statistics

Views

Total Views
1,327
Views on SlideShare
1,327
Embed Views
0

Actions

Likes
0
Downloads
29
Comments
0

0 Embeds 0

No embeds

Accessibility

Categories

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment
  • Welcome to the eUCP Internet Trade Finance Workshop. This workshop’s objective is to provide trade finance professionals the capability to initiate and settle trade finance transactions using the Internet.
  • The eUCP Workshop is divided into 18 sections, these include: 1. The Global Trade Business Model 2. Letters of Credit 3. Assignment of Proceeds 4. Transferable Letters of Credit 5. Negotiable Electronic Records 6. Standby Letters of Credit 7. Documentary Collections 8. Open Account Transactions 9. Bills of Exchange 10. Global Trade Credits 11. Incoterms 12. UCP 500 13. eUCP 500 14. eTrade Finance Platform 15. eTrade Action Maps 17. Export Transaction Financing 18. eTFP Database
  • This section is about the Global Business Model The Global Business Model incorporates business systems and documents that are understood worldwide.
  • The Global Business Model concept is the global understanding of commercial documents, customs and procedures. Document examples include Invoices, Packing lists, Letters of Credit and Bills of Lading.
  • The Global Trade Business Model is a business process for conducting trade that is defined by globally recognized trade forms and documents. The definition of “Trade” is the exchange of tangible goods or services between a seller and a buyer in another country for cash, acceptance or other goods. The definition of “Trade Finance” is the settlement, or reimbursement for title using a Documentary Letter of Credit, Standby Letter of Credit, Documentary Collection, or Bill of Exchange through the international banking system.
  • The traditional trading process has four basic steps leading to the exchange of goods for reimbursement. The “Sale” phase. The “Performance” phase. The “Logistics” phase. And the “Settlement” phase.
  • The Sale phase consists of finding the buyer and/or seller leading to a Purchase Order. The Performance phase involves the manufacturing and staging of the goods ready for shipment. The Logistics phase involves moving the goods from the export to the import country. The Settlement phase involves the exchange of title for the goods from the seller to the buyer.
  • The Sale Phase consists of five steps: The first step is for the buyer to find a source for the product or services he needs with catalogs, Internet, trade shows, and business contacts. After a source is identified, the buyer and seller decide on the terms and conditions by which they intend to do business. The agreed upon terms and conditions are put into a Basic Ordering Agreement, which includes, the names and addresses of the buyer and seller, shipping points, Incoterm, banks to be used and the method of payment. Next, the buyer then provides the seller a Request for Quotation for specific quantities based on the terms and conditions of the Basic Ordering Agreement. The seller returns the Quotation based on the Request for Quotation. The buyer then places a Purchase Order for the quantity and prices quoted. The Purchase Order, or PO, becomes the contractual agreement for price, quantity and terms. The Sale Phase is concluded when the seller accepts the PO with a Purchase Order Acknowledgement.
  • The Performance Phase is the responsibility of the seller. The seller is obligated to produce the goods and services contained in the accepted Purchase Order or Letter of Credit. Performance by the seller is evidenced for title transfer by evidence of movement, value, content and compliance. Evidence of movement is the transport document, such as an Ocean Bill of Lading, or Air Waybill. Evidence of value is always a commercial Invoice. Evidence of content is usually a Packing List. And evidence of compliance can be an Inspection Certificate or statement by the seller that he is in compliance to the PO or specifications.
  • The Logistics Phase is usually managed by a third part, such as a Freight Forwarder, rather than the buyer or seller. The Logistics Phase begins with the exporter making the goods available for shipment. A typical movement begins with the goods being picked up for carriage by a trucking company that takes them to the port for shipment. A nominated freight forwarder arranges for a carrier to transport the goods. The carrier transports the goods to the port of destination, where they are unloaded and managed by the inbound freight forwarder. Usually the receiving freight forwarder is also a customs broker. After the goods clear customs they are transported to the importer.
  • The Settlement Phase process depends on which international payment method the buyer and seller have selected. There are six basic payment methods for international settlement. 1. Documentary Letter of Credit for payment at shipment by a bank. 2. Documentary Trade Credit for payment at shipment by the seller. 3. Documents Payment for payment upon delivery. 4. Documents Acceptance for payment by a promissory note upon delivery. 5. Clean Collection for cash in advance of shipment. And 6. Open Account for payment upon presentation of a commercial invoice after shipment.
  • There are six basic payment methods for settling trade transactions. One is not better than another, rather they are options that the buyer and seller may chose. A “Clean Collection” is an advance payment since payment is made before shipment. The goods are already paid for and are available at their destination. There is no risk of non-payment to the seller since he is already paid. A “Sight LC” is paid upon presentation and negotiation of the required documents. The goods are available when the LC is paid. There is minimal risk to the seller since the issuing bank is responsible for payment. A “Usance LC” is paid upon maturity at acceptance of the sellers draft. The goods are available to the buyer upon the issuing banks acceptance of the draft. There is minimal risk to the seller since the issuing bank is responsible for payment. A “D/P Collection” is Documents Against Payment. The goods are available to the buyer when he pays the amount requested by the seller for the goods. A “D/A Collection” is Documents Against Acceptance. The goods are available to the buyer when he accepts the obligation to pay the seller upon maturity of the Bill of Exchange. Open Account is paid by the buyer based on the terms stated in the submitted invoice.
  • The settlement process depends on trade and transport documents, these documents include: The Proforma Invoice, an estimate of the final invoice before shipment. The Letter of Credit Instructions, the terms and conditions for the buyers application for a Letter of Credit. The Letter of Credit Application, the application to the buyer’s bank for a Letter of Credit. The Documentary Letter of Credit, issued by the buyer’s bank. The Letter of Credit Advice, the advice of a Credit to the seller. The Export License, sometimes required for export. And the Shipper’s Letter of Instructions, which is the exporters shipping and document instructions to the freight forwarder or carrier.
  • Addition Settlement documents include: The Packing List, evidences the actual contents of shipment The Commercial Invoice, states the value of the goods shipped. The Certificate of Origin, evidences the origin of the goods The Beneficiary’s Certificate is a statement that a requirement is true or has been accomplished. The Quality Certificate, the seller’s or third party statement of quality compliance. The Certificate of Insurance, states the amount of cargo Insurance and conditions of it’s application. The Ships Register Certificate, states the age and register of the cargo carrying vessel. And the Bill of Exchange, the seller’s demand for payment.
  • Transport Documents reflect the mode used for carrying the cargo. A Bill of Lading is used for Ocean or Marine cargo. An Air Waybill or Consignment Note is used for air shipments. A Rail Waybill is used for rail shipments. A Truck or Straight Waybill is used for truck shipments. And a Courier Receipt is used for expedited delivery service by air courier.
  • 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 worldwide.

GBM - InterNetLC.com - eTrade Finance Platform GBM - InterNetLC.com - eTrade Finance Platform Presentation Transcript

  • 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
    TABLE CONTENTS e InterNetLC.com ™
  • 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 ™