In China's export business, negotiation letters of credit are widely used, and there are three main export settlement methods for such letters of credit:
1. Settlement or payment receipt.
It means that the negotiating bank, after receiving the export documents of foreign trade companies, passes them to the foreign paying bank for payment after examination and verification. After receiving the credit notice of the payment bank to transfer the payment to the account of the negotiating bank, it will be converted into RMB according to the foreign exchange quotation of the day and allocated to the foreign trade company.
Banks don't advance money, they collect money. This way is not conducive to promoting foreign trade enterprises to expand exports. But this method is relatively safe for negotiating banks, so it is often used.
2. Regular settlement of foreign exchange
Regular settlement of foreign exchange means that Chinese banks set a fixed settlement period in advance according to the time required to claim from foreign banks (such as 7 days or 14 days after the bank approves the bill), and take the initiative to settle accounts receivable into RMB and record them in the accounts of foreign trade enterprises regardless of whether they receive the ticket.
3. Export bills
Export draft, also known as bill settlement, refers to the negotiation bank buying the beneficiary's (exporter's) bills and documents according to the terms of the letter of credit, deducting the interest from the negotiation date to the expected bill receipt date from the par value, and converting the balance into RMB according to the foreign exchange rate on the negotiation date and distributing it to foreign trade companies.
After the negotiating bank advances funds to the beneficiary to purchase the documentary draft, it becomes the holder and can claim payment from the paying bank against the bill. The purpose of bank export bill is to provide financing for foreign trade enterprises, which is conducive to the capital turnover of foreign trade companies. But at present, banks can't fully guarantee the security of letters of credit, so this method of foreign exchange settlement has not been widely used at present.
Extended data:
The method of foreign exchange settlement is the way that the consignor or his agent of export goods collects foreign exchange through the bank. The code of settlement method is divided into remittance, collection, letter of credit and others.
1. Remittance includes:
(1) Remittance: The buyer will hand over the payment to the bank at the place of import, and the bank at the place of import will issue a payment authorization and mail it to the bank at the place of export, entrusting it to pay the seller.
(2) T/T: At the request of the buyer, the bank at the place of import directly sends a payment authorization by telegram, entrusting the bank at the place of export to pay the seller.
(3) Remittance by draft: The buyer buys a bank draft from the bank at the place of import and sends it to the seller, and the seller or his designee takes the ticket to the relevant bank at the place of export to withdraw money.
2. The series includes:
(1) D/P means that the seller instructs the remitting bank to hand over the documents only if the buyer pays for the goods.
(2) D/A: After the buyer accepts the bill of exchange, he can obtain the documents, take delivery of the goods, and pay the payment when the bill is due.
3. Letter of credit: A letter of credit is a certificate that the bank guarantees the payment of the buyer and the seller. According to the buyer's application, the bank will issue a letter of credit to the seller to guarantee payment, that is, as long as the seller submits documents that meet the requirements of the letter of credit, the bank will guarantee payment.
Baidu encyclopedia-settlement of foreign exchange