Second, the noun explanation
1, letter of credit is the most commonly used payment method in international trade at present, and it is a letter of credit guaranteed by a bank. As long as you provide the corresponding documents to the bank according to the terms of this contract, you must pay the money to you. Therefore, it should be said that letter of credit is a very safe payment method in theory. Reliable letters of credit can even be used as collateral to obtain loans from banks to facilitate the seller's capital turnover, that is, letters of credit package loans. But in practice, letters of credit are sometimes not so safe. The reason is that there may be soft clauses in the letter of credit that are difficult for you to do, resulting in artificial inconsistency.
2. T/T is a very simple operation mode, which can be divided into pre-T/T and post-T/T. Pre-T/T means to pay a part of the deposit, usually 30%, after the contract is signed. After the production is completed, notify the payment, pay off the balance, and then deliver the goods and deliver a full set of documents.
D/P D/P is a way to deliver documents under documentary collection, which means that the exporter's payment documents are based on the importer's payment, that is, the importer can only collect documents from the collecting bank after paying. Divided into documents payable at sight.
At sight) means that the exporter draws a draft at sight, and the collecting bank reminds the importer that the importer must pay after seeing the bill. After payment, the importer gets the shipping documents.
Three. Comparison between telegraphic transfer and letter of credit
Compared with letter of credit, 1 and T/T are very simple and flexible, such as tight delivery, changing packaging and so on. It doesn't matter as long as the customer agrees. If it is a letter of credit, the letter of credit must be amended, otherwise, if there are discrepancies, the customer can refuse to pay.
2. The cost of telegraphic transfer is lower than that of letter of credit, and the bank deduction is less, generally tens of dollars. Letters of credit sometimes cost hundreds of dollars. So some factories set the telegraphic transfer quotation lower than the letter of credit. However, generally speaking, if the documents are fully prepared and the collection is guaranteed by the bank, the letter of credit is more reliable than the telegraphic transfer. With a letter of credit, you can go to the bank to package loans, and the financial pressure is not great. However, in countries with poor bank credit or strict foreign exchange control, letters of credit are very risky.
T/T and L/C have their own advantages and disadvantages. If telegraphic transfer is combined with letter of credit, it is very safe, 30% telegraphic transfer and the rest letter of credit.
Extended data
Foreign trade settlement, or collection, as the name implies, is foreign trade collection, which can be simply divided into two categories.
1, online payment, you can directly complete the payment online, which is fast and convenient. The third-party payment company guarantees that it can refuse to pay, and the interests of consumers are guaranteed. On the other hand, the relative risk has increased, mainly by a small amount. Mainly used for online earning, foreign trade retail and small collection.
① Electronic accounts: the main payment methods are electronic accounts to electronic accounts (similar to Alipay and Alipay transactions, both parties need to register and own accounts), mainly including Paypal, MoneyBookers, Ap, Google checkout, LR, etc.
② International credit card payment: third-party credit card payment companies provide payment channels to achieve the purpose of collection, which is a payment gateway-to-payment gateway model (similar to online banking payment), mainly including ChronoPay.
, IPS, PayEase, Double Pay (95epay), ECPSS, Gspay, online banking, Motopay, 2checkout and so on.
2. Bank remittance mode, mainly through bank transfer and remittance company. Convenient for large payment, safe, not suitable for small collection, high cost. Once the funds are issued, they cannot be recovered and there is no protection for consumers. Mainly used for wholesale foreign trade collection. There are mainly telegraphic transfers (TT)
Transfer), letter of credit, Western Union (Wu, Western Union
Union, international express remittance company), moneygram (MG, global express remittance service), etc.
Refer to Baidu Encyclopedia for foreign trade settlement.