Acknowledgements

Preface

1 Introduction

1.1 International settlement vs.trade finance

1.2 The evolution of international settlement

From cash settlement to non-cash settlement

From direct payment to indirect payment

From simple price terms to complex price terms

From paper documents to electronic documents

1.3 Electronic communication and payment systems

SWIFT

BOLERO

CHIPS

CHAPS ＆ Faster Payment

Fedwire？ Funds Service,Fedwire Securities Service and National Settlement Services

TARGET and TARGET2

CNAPS

1.4 Players,roles and risks in international trade payments

Exporter

Importer

Banks

1.5 Types of payment techniques

Consignment

Open account

Documentary collections

Letters of credit

Guarantees/standby letters of credit

Payment in advance

Factoring

Forfaiting

1.6 Related laws,customs and practice

Laws on negotiable instruments

International customs and practice for collections,documentary letters of credit,standby letters of credit,guarantees and international factoring

International conventions on bills of lading

1.7 Correspondent bank

Correspondent bank agreement

Control documents

2 Negotiable instruments

2.1 Characteristics and functions of negotiable instruments

Negotiability

Unconditional promise or order to pay

Requisite in form

Non-causative nature

Functions of negotiable instruments

2.2 Negotiable instrument laws

2.3 Parties to a negotiable instrument

Drawer

Drawee

Payee

Indorser

Acceptor

Guarantor

Holder

The relationship of the parties to negotiable instruments

2.4 Bills of Exchange

Definition

Essential items required in a bill of exchange

2.5 Acts related to a bill of exchange

Issue

Indorsement

Presentment or presentation

Acceptance

Payment

Dishonour

Protest

Notice of Dishonour

Right of recourse

Guarantee or aval

Acceptance for honour supra protest

Payment for honour supra protest

Classification of bills of exchange

2.6 Promissory Notes

Definition

Essential items of a promissory note

Joint notes vs.joint and several notes

Types of promissory notes

Differences between bills of exchange and promissory notes

2.7 Cheques

Definition

Essential items of a cheque

Types of cheques

Differences between cheques and bills of exchange

3 Remittance

3.1 Definition

3.2 Parties to a remittance

Remitter

Remitting bank

Paying bank

Payee or beneficiary

3.3 Types of remittance

Mail transfer

Telegraphic transfer

Demand draft

3.4 Reimbursement of remittance cover

3.5 The cancellation of remittance

3.6 Application of remittance in international trade

Cash in advance

Open account

3.7 Trade finance under remittance

Financing under T/T

Credit insurance and bank financing

3.8 Other methods of remittance

Credit card

PapPal

Western Union and MoneyGram

Cheque payment

4 Collection

4.1 Definition

4.2 Basic parties to a collection

Principal

Remitting bank

Collecting bank

Presenting bank

Drawee

Collection instruction

The relationship between the basic parties

4.3 Types of collection

Clean collection

Documentary collection

Procedures of a documentary collection transaction

4.4 Terms of releasing documents

Documents against payment(D/P)

Documents against acceptance(D/A)

4.5 Liabilities and disclaimers of banks under a collection

Banks have no obligation to handle a collection

Disclaimer for acts of an instructed party

Disclaimer on documents received

Disclaimer on effectiveness of documents

Disclaimer on delays,loss in transit and translation

Banks do not deal with the goods,services or other acts

4.6 Financing provided by banks under a collection

Financing provided by the remitting bank to the exporter

Financing provided by the collecting bank to the importer

4.7 Problems frequently arising from a collection

The problems of using D/P at a fixed period after sight

Problems related to insurance

Negative events that may occur to the exporter

5 Letters of credit

5.1 Definition

5.2 Characteristics of a documentary credit

A written undertaking on the part of the issuing bank

Independent of the sales contract

Exclusively dealing with documents

5.3 Parties to a letter of credit

Applicant

Issuing bank

Beneficiary

Advising bank

Confirming bank

Paying bank/accepting bank

Negotiating bank

Claiming bank

Reimbursing bank

5.4 Stages to a documentary credit operation

Stage 1:The importer applies to its bank for a documentary credit

Stage 2:The issuing bank reviews the importer's application for credit and issues a documentary credit

Stage 3:The advising bank advises the credit to the seller

Stage 4:The exporter examines the credit,prepares for the required documents and submits the documents to the nominated bank

Stage 5:The issuing bank examines the documents and pays or reimburses the negotiating bank

Stage 6:The importer redeems the documents from the issuing bank and picks up the goods against the bills of lading from the shipping company

5.5 Contents of a documentary credit

Items on the credit itself

Items on draft

Items on goods,shipping documents and transport

Other items

5.6 The examination of a documentary credit

The examination by the advising bank

The examination by the exporter

5.7 Types of credit

Irrevocable credit

Confirmed irrevocable credit

Sight payment credit

Acceptance credit

Deferred payment credit

Negotiation credit

Straight credit

Anticipatory credit

Green clause credit

Transferable credit

Back-to-back credit

Revolving credit

Reciprocal credit

5.8 Trade finance provided by banks

Finance provided to the exporter

Finance provided to the importer

5.9 Letters of credit vs.other payment methods

6 Standby letters of credit

6.1 Definition

Origin

UCP 600 vs.ISP 98

Definition by ISP 98

6.2 Characteristics of a standby letter of credit

Clean credit

Financial obligation

Non-financial obligation

Irrevocable form

Duration and amount

Payment procedures

6.3 Parties to a standby letter of credit

Applicant

Issuer

Beneficiary

Transferree beneficiary

Confirmer

6.4 Types of documents required in a standby letter of credit

Demand for payment

Statement of default or other drawing event

Negotiable documents

Legal or judicial documents

Other documents

Examination of the documents

6.5 Types of standby credit

Performance standby

Advance payment standby

Bid bond/tender bond standby

Counter standby

Financial standby

Direct payment standby

Insurance standby

Commercial standby

6.6 The problems arising by making a standby subject to UCP

When a copy bill of lading is required

When partial payment is used

7 Letters of guarantee

7.1 Definition

Demand guarantee

Contract guarantee

7.2 Characteristics of a demand guarantee

7.3 Basic parties to a demand guarantee

7.4 Direct and indirect guarantees

7.5 Types of guarantee

Tender guarantee/bid bond

Performance guarantee

Repayment guarantee

Advance payment guarantee

Maintenance guarantee

Retention money guarantee

Counter guarantee

7.6 Contents of a guarantee

Basic contents of a guarantee

Additional clauses of a guarantee

Basic contents of a counter guarantee

8 International factoring

8.1 Origin and legal framework

Origin

Legal framework

8.2 What is factoring?

8.3 The procedures of international factoring

8.4 Types of factoring

Maturity factoring and financed factoring

Disclosed factoring and undisclosed factoring

Single factoring and co-factoring

8.5 Services provided to the exporter by a factor

Credit investigation of buyers

Credit protection

Collection and management of receivables

Finance

8.6 The role of factoring in international trade

8.7 Risks faced by factors

Credit risks

Operational risks

Legal risks

8.8 Factoring in China

9 International forfaiting

9.1 Origin and evolution

9.2 What is forfaiting?

Parties to the forfaiting transaction

Required Documents

Aval or guarantee

Costs

Application and tenors

9.3 The mechanics of a forfaiting transaction

The underlying trade contract

The forfaiting proposal

Terms and conditions

Summary of the procedures of forfaiting

9.4 Forfaiting vs.other trade financing methods

Forfaiting vs.officially supported export credits

Forfaiting vs.factoring

9.5 Forfaiting in China

10 Documents used in international trade payments

10.1 Types and functions of documents

Basic documents and additional documents

Financial documents and commercial documents

Representing the title to the ownership of the goods

Evidencing the fulfillment of obligations

10.2 Draft(s)drawn under a letter of credit

Characteristics of drafts drawn under a letter of credit

Examination of the draft(s)drawn under a letter of credit

The most frequently found discrepancies with drafts

10.3 Commercial invoices

Contents of a commercial invoice

Other invoices

10.4 Transport documents

Marine bills of lading

Basic parties to a bill of lading

Main contents of a bill of lading

Types of bills of lading

The most frequentl+]++[ found discrepancies with a bill of lading

Other transport documents

10.5 Insurance documents

Types of marine cargo transport insurance

Examining an insurance policy under a letter of credit

The most frequently found discrepancies with an insurance document

10.6 Other documents

Certificates of origin

Inspection certificate

Packing list and weight list

Cable copy

Beneficiary's statement

Shipping company's certificate

Certificate of analysis

Certificate of weight

10.7 Examination of documents under documentary credits

Examination of documents with reference to the documentary credit

Examination of documents with reference to the UCP

Examination of documents with reference to one another

References