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2021 | Book

Payment Methods and Finance for International Trade

Author: Prof. Sang Man Kim

Publisher: Springer Singapore

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About this book

This book explains various methods of payment in international trade and trade finance schemes for international trade. It also presents an overview of the concepts, purposes, features, and risks of international trade.

A grasp of the features and risks of international trade facilitates a better understanding of the numerous methods of payment in international trade and the relevant trade finance schemes, which is essential to success in international trade transactions.

In order to complete an international trade transaction, depending on the terms, both parties need access to funds. Compared with large companies, small and medium-sized enterprises (SMEs), frequently face difficulties in raising capital or funds, but financing an international trade transaction is often the key to its successful completion. As such, selecting an appropriate financing mechanism from the various options available is vital.

This book offers a systematic overview of international trade and payment together with trade finance, providing instructive examples and illustrations of trade documents, each method of payment, and trade finance including export credit insurance or guarantee.

Table of Contents

Frontmatter
Chapter 1. Introduction to International Trade
Abstract
International trade can be defined by its various purposes. International trade can be defined as the “transaction of goods and/or services between two or more countries”. It can also be defined as the “transaction of goods and/or services across national boundaries”. Goods are generally something tangible, while services are intangible.
Sang Man Kim
Chapter 2. International Trade Contracts
Abstract
A contract is an agreement between two or more parties creating legally enforceable obligations. A valid contract creates legal obligations. A contract stipulates the terms and conditions of a particular transaction, and specifies the rights and obligations of the parties concerned.
Sang Man Kim
Chapter 3. Documents for International Trade
Abstract
In international trade, the number of documents required and the nature of the documentation will vary greatly depending on the underlying contract (e.g. sales contract), the nature of the goods, the value of the cargo, the complexity of the export sale, the shipment/transport required and the rules, restrictions and trade agreements of the countries concerned.
Sang Man Kim
Chapter 4. Overview of Payment Methods
Abstract
This chapter outlines payments in international trade, and basic methods of payment. This chapter provides a case study (or various payment clauses in international trade contracts) for the respective methods of payment.
Sang Man Kim
Chapter 5. Payment in Advance (Cash in Advance)
Abstract
In a “payment in advance” (also referred to as a “cash in advance”) transaction, the seller gets paid before “delivery of goods” (e.g. shipment of goods, arrival of goods, etc.). Payment in advance requires the buyer to pay prior to the delivery of the goods.
Sang Man Kim
Chapter 6. Open Account
Abstract
In an open account transaction, the seller ships (or delivers) goods and sends the shipping documents including invoice directly (not using a banking system) to the buyer without receiving payment, and the buyer will pay at a future due date. The seller extends credit to the buyer by allowing them to pay in arrears.
Sang Man Kim
Chapter 7. Documentary Collection
Abstract
A documentary collection (also sometimes referred to as a “bank collection”, or a “bill for collection”) is a payment method whereby the seller entrusts the collection of payment to its bank (“remitting bank”) by providing collection documents and a collection form, which will forward those documents to the buyer’s bank (“collecting bank’) with a collection instruction to release the documents to the buyer against payment or against acceptance of a documentary draft (bill of exchange).
Sang Man Kim
Chapter 8. Documentary Credit
Abstract
Unlike most domestic sales transactions, in a sale of goods across national borders, the seller and the foreign buyer may have no prior business transactions with one another; or the seller and the foreign buyer may know nothing about the other party.
Sang Man Kim
Chapter 9. UCP and Letter of Credit Examples
Abstract
The law relating to documentary credits developed before the First World War principally in England, and thereafter by courts in the USA. In the USA, the governing law is usually the applicable state’s version of Revised Article 5 of the Uniform Commercial Code (UCC).
Sang Man Kim
Chapter 10. Other Payment Methods
Abstract
The bank payment obligation (BPO) (see Fig. 10.1) is a newly introduced instrument in international trade. The BPO is an irrevocable undertaking by the obligor bank (the buyer’s bank) to pay the recipient bank (the seller’s bank) in case of the successful electronic matching of data.
Sang Man Kim
Chapter 11. Independent Guarantee (Demand Guarantee)
Abstract
In international trade it has become increasingly common for either or both parties to demand separate undertakings covering the obligations assumed by the other party.
Sang Man Kim
Chapter 12. Trade Finance for International Sale of Goods
Abstract
“Trade finance” means financing the funds required for the performance of an international trade transaction.1 In an international sale of goods, both parties seek trade finance depending on the terms and conditions of a transaction.
Sang Man Kim
Chapter 13. Finance for Overseas Construction
Abstract
Overseas constructions are normally so huge and complex that tremendous amounts of funding is required. An overseas construction project requires longer-term financing than traditional commodities.
Sang Man Kim
Chapter 14. Export Credit Insurance or Guarantee
Abstract
Export credit insurance (also referred to as “export insurance”, “export credit guarantee”, or “trade credit insurance”) was initially introduced to support exports.
Sang Man Kim
Backmatter
Metadata
Title
Payment Methods and Finance for International Trade
Author
Prof. Sang Man Kim
Copyright Year
2021
Publisher
Springer Singapore
Electronic ISBN
978-981-15-7039-1
Print ISBN
978-981-15-7038-4
DOI
https://doi.org/10.1007/978-981-15-7039-1

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