Lesson Twenty Two

Paying Procedures Under Collection and L/C

 Paying Procedures under Collection:

Figure 1 D/P sight

1.       After shipment of the goods on the contract, the exporter fills up letter of collecting application and draws sight bill, then sends the bill with shipping documents to the remitting bank for collection.

2.       The remitting bank writes letter of entrusting collection, which it sends with the sight bill and the shipping documents to the collecting bank for collection.

3.       The collecting bank presents the documentary bill to the importer.

4.       The importer pays the bill.

5.       The collecting bank gives the documents to the buyer.

6.       The collecting bank transfers account and notifies the remitting bank of the payment.

7.       The remitting bank transfers account and notifies the exporter of the payment.

Paying Procedures under Collection:

Figure 2 D/P after sight

1.       After shipment on the contract, the exporter fills up letter of collecting application and draws time bill, then sends the bill with shipping documents to the remitting bank for collection.

2.       The remitting bank writes letter of entrusting collection, which it sends with the time bill and the shipping documents to the collecting bank for collection.

3.       The collecting bank presents the documentary bill to the importer, who accepts the bill and gives it back to the collecting bank.

4.       The importer pays when the bill is due.

5.       The collecting bank gives documents to the importer.

6.       The collecting bank transfers account and notifies the remitting bank of the payment.

7.       The remitting bank transfers account and notifies the exporter of the payment.

Paying Procedures under Collection:

Figure 3 D/A

1.       After shipment on the contract, the exporter fills up letter of collecting application and draws time bill, then sends the bill with shipping documents to the remitting bank for collection.

2.       The remitting bank writes letter of entrusting collection, which it sends with the time bill and the shipping documents to the collecting bank for collection.

3.       The collecting bank presents the documentary bill to the importer, who accepts the bill. The collecting bank gets back the accepted bill and gives the documents to the importer.

4.       The importer pays when the bill is due.

5.       The collecting bank transfers account and notifies the remitting bank of the payment.

6.       The remitting bank transfers account and notifies the exporter of the payment.

Paying Procedures under L/C:

1.       The importer makes application to the opening bank, which opens L/C to the exporter with service charge.

2.       The opening bank sends L/C to the advising bank in the exporter’s country.

3.       The advising band sends L/C to the exporter.

4.       After shipment, the exporter gets ready all the shipping documents and draws bill of exchange,which the exporter sends to the negotiating bank during the validity of the L/C.

5.       The negotiating bank pays the exporter deducting services charge and interest.

6.       The negotiating bank sends the documentary bill to the opening bank for payment.

7.       The opening bank pays.

8.       The opening bank notifies the importer to get the documents against payment.

9.       The importer pays for the documents and gets the title to the goods after payment. The business is done.

Notes:

1.       collection托收

2.       principal委托人，本人，当事方

3.       remitting bank托收行

4.       collecting bank代收行

5.       payer付款人

6.       D/P sight即期付款交单

7.       D/P after sight远期付款交单

8.       beneficiary 受益人

9.       advising bank (notifying bank)通知行

10.   negotiating bank议付行

11.   opening bank开证行

12.   paying bank付款行

13.   applicant开证申请人

14.   application申请书

15.   deduction扣除，扣除额