Chapter 7  Payment

Section 1  Introduction
Section 2  Specimen letters
Section 3  Useful Expressions (Self study after class)
Section 4  Guide to Writing
Section 5  Exercises

Section 1  Introduction

Part 1

Understand the various methods of payment in order of (按…顺序) decreasing risk to the seller (= exporter) and increasing risk to the importer. (See Table 7-1, p.79)

    They are open account (记账, 赊账), time draft (远期汇票), sight draft (即期汇票), letter of credit (信用证), cash in advance (预付现款).

 

Section 2  Specimen Documents

   Specimen 1: Advice of payment (付款通知) by importer

 

    We have instructed our bank to arrange for a letter of credit for $8,789.90 to be paid against your pro-forma invoice (形式发票) No. H1167/G, and the proceeds (收益) will be credited to you as soon as Bank of China receive the (shipping) documents.

   Specimen 2: Advice of payment (付款通知) by importer

Thank you for being so prompt in sending the (shipping) documents for our last order No. 15879. We have accepted the sight draft, and the bank should be sending you an advice shortly.

We have been dealing with you on a D/P basis for over a year and would like to change the payment by 40-day B/E (Bill of Exchange, 汇票), D/A.

When we first contacted you last February, you told us that you would be prepared to reconsider terms of payment once we had established a trading association. We think that sufficient time has elapsed for us to be allowed the terms of payment we have asked for.

As we will be sending another order within the month, could you please confirm that you agree to these new terms of payment?

Specimen 3: Advising the seller of credit issuance

A confirmed, irrevocable letter of credit against S/C No. 2235 has been issued through the National Bank, London. The amount is GBP 20,000 and the expiry date is July 15, 2012. Please approach your bank with this matter.

You are authorized to draw a 45 days’ draft on the opening bank against this credit for the invoice amount, including the cost of freight and insurance, payable against a complete/full set of shipping documents, consisting of

       a full set of clean shipped on board ocean bills of lading (提单) made out to order and blank endorsed, marked “Freight Prepaid”, notifying the Applicant.

certificate of origin in duplicate (一式两份)

signed invoice in triplicate (一式三份)

insurance policy in triplicate covering (投保) All Risks and War Risk for full invoice value plus 10% as per China Insurance Clauses

With the sales season approaching, we are badly in need of the goods ordered. Please arrange for shipment immediately upon receipt of the L/C and let us know at your earliest convenience the name of the vessel and its sailing date.

   A possible reply by exporter to the above letter

Thank you for your letter of May 10, 2012. We are pleased to learn that the L/C covering (关于) our S/C No. 2235 has been opened and sent out.

When we receive your L/C, we will make proper shipping arrangements and then draw a 45 days’ draft on your bank. We will answer your request for the name of the vessel and sailing time as soon as they are available.

We look forward to hearing of the safe arrival of your order and to doing further business with you.

Specimen 4: Urging the opening of L/C by exporter

May we draw your attention to the covering (相关) L/C against our S/C No. 2145 for 5000 dozen men’s T-shirts? The L/C is due to reach us before July 10 for our August shipment. However, it has not arrived yet, though the goods have long been ready for shipment.

 

Could you please find out what has happened to the L/C? Your attention to this matter would be greatly appreciated.

  Specimen 5: Request to extend the L/C by exporter

L/C No. 20060715

The above L/C covering 4000 dozen poplin shirts (府绸衬衫) arrived here yesterday. However, we have to ask you to extend it because of the unavailability of any vessels.

As stipulated in our S/C ABT234, shipment was to be effected in July provided your L/C reached us not later than July 5. Unfortunately, the only vessel available this month is leaving in a day or two, and the deadline for booking shipping space (订舱) on it has passed. This means that it is now impossible for us to ship the goods in July.

Would you therefore please extend the above L/C to 1 September for negotiation (议付) and to 15 August for shipment, and have the amendment advice reach us by August 5 at the latest. Only in this way can we make the earliest shipment possible.

With anticipation (期待) of your cooperation in this matter.

   Possible reply (positive) by importer

We have received your fax of July 9 requesting us to extend the shipment date and the validity of L/C No. 20060716 to August 15 and September 1, respectively.

 

We have instructed our bank to amend the above L/C as requested in your fax. We hope that everything is now in order and you will be able to ship the goods by August 15.

  Possible reply (negative) by importer

In reply to your letter of July 9, we feel that it will be difficult to extend the validity of L/C No. 20060715 to 1 September and shipment date to 15 August.

The present L/C is already the earliest possible because the application for the relevant import license involved a lot of formalities. The import license was not issued until July 1, and becomes invalid after August 15. Arranging another L/C or amending the existing one may not be possible by 5 August.

Under these circumstances (情况), could you please try your best to ship the goods within the time limit of the L/C. We would appreciate your cooperation in this respect (这方面) and are looking forward to hearing from you about the shipment of the goods.

   Specimen 6: Request to amend the L/C

We have received L/C No. 06AM720 issued by the Chartered Bank, London for our S/C No. 195. However, on examining the clauses, the following points are found not to be in conformity with (符合) the terms stipulated in the S/C:

the commission rate stated in the S/C is 3% rather than 6%

shipment is to be made during July/August instead of “on or before August 1” as in the above L/C.

the goods should be insured for 110% of the invoice value, not 120%.

As the goods are ready for shipment, your amendment to the L/C would be appreciated.