Course summary (Methods of payment / Letters of credit):
Objectives: this learning unit aims at:
- Analyzing various methods of payment used in International trade and
outlining their differences, advantages and disadvantages both for the importer
and the exporter.
- To understand what Documentary collections are and how they work. Export and
Import Collections will be analyzed.
- Understanding the following:
- The importance of Documentary credits and letter of credit in International trade
- How a Documentary credit works
- Obligations of the parties involved
- To understand how Import Documentary credits operate.
In this learning unit we will examine how to receive and effect payment for International contracts of sale. Our focus will be on export methods of payment. The information presented here is also applicable to import
transactions. The selection of the most suitable method of payment is a key
factor of a successful export sale.
Examples of the course Methods of payment / Letters of credit:
Student will become familiar with the parties, obligations and key
terminology used in Documentary credit operations as will as learn about
the key checklists to take into account when preparing documents for
presentation under Documentary credits.
A Documentary credit is an agreement under which a bank acting at
the request and on instructions of the importer makes an undertaking to effect
payment to the exporter against presentation of the required documents within the specified period of time, provided that the documents strictly comply with
the terms and conditions stipulated in the credit. Letters of credit are more
favorable for exporters rather than importers, as they are aimed at protecting
The exporter.
Import Letters of credit. This is a short but very important learning unit. The ability of the trade practitioner and their bankers to issue
Documentary credits which are complete and precise is essential. This unit will
familiarize you with the role of the Issuing Bank, how to complete the DC
application form and most importantly how to analyze the Credit as issued.
A Documentary collection (Contents: Documentary collection. Clean
Collection. Bill of Exchange. Managing collections. Doc. Collection Simulation.)
is a method of payment whereby the exporter initiates, through the banking
system, the collection of money due to him from the importer. Payment will be
made against a Bill of Exchange and documents of title. Documents can be
released against acceptance of the Bill of Exchange or against payment at sight.
This course will give you a practical understanding of this popular method of payment.
The Uniform Rules for Collections, 1995 Revision, ICC publication No. 522, shall apply to all collections where such rules are incorporated into the text
of the "collection instruction". In the course of this unit we will provide
practical examples of the application of URC 522. All serious International trade specialists should obtain a copy of this ICC Publication.
Learn the differences between clean and Documentary collections and analyze
the advantages and disadvantages for the importer and for the exporter. Learn
how to complete a Bank Documentary collection order and how to manage export
collections at the bank. Understand the difference between documents against
acceptance and documents against payment. Bills of Exchange and the Documentary
Collection Cycle.
