EXPORT IMPORT PROCEDURE

AND DOCUMENTATION

PRESENTED BY :
NIKHIL BADSIWAL
POOJA TANWAR
BHAVNA THAKUR
ROHIT GULATI

*METHODS OF PAYMENT

In international trade , payment for the goods can be

made by the means of the following methods of
payments . These payment methods are also known
as payment terms.
1. Advance payment
2. Open account
3. Documentary collections :
. Documents against payment
. Document against acceptance
4. Letter of Credit

* ADVANCE PAYMENT
The customer sends money first to the exporter.
The exporter checks that the money has been received.
The exporter sends the goods to the customer.
The exporter may request advance payment because (for
example) they are unwilling to send unpaid-for goods to the
buyers country because of some risk over payment. The
buyer may agree to pay in advance because they want to
induce the exporter to an established relationship.
If advance payment is agreed, the buyer sends the payment
before the exporter consigns the goods for delivery. The
exporter sends off any documents that the buyer will need
(e.g. original bills of lading, export licences) after handing
the goods to the carrier or carriers agent.

*OPEN ACCOUNT
An open account transaction is a sale where the goods are
shipped and delivered before payment is due, which is
usually in 30 to 90 days. Obviously, this option is the most
advantageous option to the importer in terms of cash flow
and cost, but it is consequently the highest risk option for
an exporter. Because of intense competition in export
markets, foreign buyers often press exporters for open
account terms since the extension of credit by the seller
to the buyer is more common abroad. Therefore,
exporters who are reluctant to extend credit may lose a
sale to their competitors. However, the exporter can offer
competitive open account terms while substantially
mitigating the risk of non-payment by using of one or
more of the appropriate trade finance techniques, such as
export credit insurance.

*DOCUMENTS AGAINST PAYMENT

* Under this method , the exporter is to ship the
goods ordered and deliver the relevant
shipping documents to the buyer abroad
through the remitting bank and the collecting
bank with instructions not to release the
documents to the buyer until the full payment
is effected.
* This process is often referred to as Cash
against Documents .

*DOCUMENTS AGAINST
ACCEPTANCE

* In this case , the remitting bank hands over the

shipping documents to the importer only upon of the

accompanying draft . The acceptance implies that he
agrees to pay the amount of the draft on the due
date. Under D/A terms , there is always a period of
credit on the expiry of which the importer is required
to make payment.

*LETTER OF CREDIT
It is also known as Documentary Credit is a widely used
term to make payment secure in domestic and
international trade.
Letter of credit is a bank-to-bank commitment of
payment in favour of an exporter , guaranteeing that
payment will be made against certain documents that ,
in presentation are found to be in compliance with terms
set by the buyer.
The banks do not deal in goods, they deal in documents.
The importer has to specify to the bank the documents
which it should examine to conclude that the exporter
has sent the shipment in strict compliance with terms
and conditions of the credit .

* Exporters documents given to advisory bank

for negotiation are as follows :
oCommercial invoice
oInsurance document
oInspection document
oBill of lading

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