Unit-4-Terms-of-Payment.ppt

Unit4TermsofPayment,LearningObjectives,TodecidetermsofpaymentaccordingtodifferentsituationsTosuggestL/CTosuggestD/PorD/AinsteadofL/CToextendtheL/C,Vocabulary,Balancesheet(B.S)BusinessintegrityCollectingbankCorrespondentCostlyCounteractCreditstatus/standingCreditworthyD/A(Documentsagainstacceptance)deefer,DepositDispatchDocumentaryDocumentaryD/P(Documentsagainstpayment)DrawonsbDulyDumpExchangequotafluctuate,HonourIncurInquisitiveIssueLiabilityMakeoutthedocumentsPresentationPunctualQuotaReciprocalRecourseRemitRemittance,RemittingbankRevocableRevolvingSluggishSRCC(strike,riot,andcivilcommotion)StandbyStoragefeeTailor-madeTurnoverValidwarehouse,LanguageFocus,InsistingonPaymentbyL/CSuggestingD/PorD/AinsteadofL/CPayingbycashorcheckEstablishingandextendinganL/C,InsistingonPaymentbyL/C,1.A:Imgladwevesettledtheprice,qualityandquantityofthetransaction.Now,whataboutthetermsofpayment?B:weonlyacceptpaymentbyirrevocableletterofcreditpayableagainstpresentationofshippingdocuments.A:theworldmarkethasbeenratherdullrecently.Wemayeasilygetbettertermsofpaymentfromothersuppliers.SocouldyouacceptD/PinsteadofL/C?B:Imafraidnot.Sincetheinternationalmonetarymarketisunstable,wefinditnecessarytohandleourbusinessonanL/Cbasis,atleastforthetimebeing.,2.weinsistonL/Cpayment.3.paymentbyletterofcreditisourusualpractice.4.PaymentbyL/Cwillgivebothofusthebanksguarantee.5.Foranewclient,wewontacceptanyothertermsofpaymentexceptL/C.6.Forsuchalargeorder,IthinkitnecessarytopaybyL/Cinordertogetthebanksguarantee.,7.Theitemyouenquiredaboutisourbestsellingproduct,anditsellswellinyourmarket.ThequickturnoverwillnotonlyoffsetyourL/Cexpenses,butalsogiveyouasatisfactoryprofit.SoweinsistonL/Cpayment.,SuggestingD/PorD/AinsteadofL/C,A:asyouknow,oursisasubstantialorder.TopaybyL/C,wellhavetodepositalargeamountofmoneyontothebank,andpayservicechargesaswell.Thatwilltieupourmoneyandthereforeincreasethecostofourimports.B:ItisbecauseofthelargeorderthatwethinkitmorenecessarytoinsistonL/Cpaymenttogetthebanksguarantee.,2.OpeninganL/Cmeansanadditionalcostonourimports.3.ItdoesntpaytodoitbyL/Casitissuchasmallorder.4.PaymentbyL/Cinvolvesadditionalexpensesforus.Thisleavesusnomarginofprofitbecauseofyourtermsofpayment.,Payingbycashorcheck,1.A:well,whatareyourtermsofpayment?B:2%forpromptpayment,netinthirtydays.2.A:canwepaybycheck?B:willyoupleasehavethecheckcertified.,Practice1,Smith&SonCompanyinNewYorkintendstoimportsomeproductsfromChinaNationalMetals&MineralsImp.&Exp.Corp.TheimportersuggestsD/Ppaymentbecausetheorderissmallandtheprofitsarelittle.ButtheexporterinsistL/CpaymentbecauseitisthefirstorderfromtheSmith&SonCompanyandheneedstheprotectionfromthebank.,EstablishingandextendinganL/C,A:PleasemakesurethattheL/Cwillreachusamonthbeforethedeliverydate.B:Imsorrywesimplycantaffordtotieupourcapitalinthebankforsuchalongtime.Will20daysdo?A:Youcantexpectustomakedeliveryinlessthan30days,foritwilltakeusalotoftimetogetthegoodsreadyandbooktheshippingspace.,2.A:whenshouldweopentheL/CifwewantthegoodsdeliveredbeforetheMay?B:TheL/Cmustreachusonemonthbeforeshipment.Sincethegoodsaresuppliedfromstock,youshouldopenanL/Cassoonaspossible,otherwise,itmaydelaytheshipment.,3A:ImcallingaboutyourorderNo.232-323B:Anythingwrong?A:theshippingtimeisgettingclose,butwehaventreceivedyourL/Cyet.B:well,wesentittoyouyesterday,andIthinkitwillreachyouinaweekorso.A:allright.WellarrangeshipmentimmediatelyassoonaswehavereceiveyourL/CB:thankyou.,4.A:WillyoupleaseextendtheL/CuntilJuly25?Atthemoment,theshippingspaceisbusy,andImafraiditwillbedifficulttodeliverthegoodsontime.B:itwillbenoproblemformetoextendtheL/Ctomeetyourrequirement.Butrememberthecommo