GLOBAL TRADE view

Protesting a bill due to non-payment in documentary collection can be a necessary step to mitigate the risk of non-payment by the Importer. Under the terms of documentary collection with delivery document against acceptance, there is always a possibility that the transaction may not work out as expected if the Importer fails to pay on the maturity date. In such cases, the Exporter's Bank, also known as the Remitting Bank, can instruct the Importer's Bank, or Collecting Bank, to protest the bill for non-payment or non-acceptance. However, it is important to note that the Collecting Bank is not obligated to follow these instructions. If the Collecting Bank decides to handle the protest instruction, they may issue a bill note. It is crucial to understand that the specifics of this note may vary depending on different jurisdictions. To note a bill, the Collecting Bank typically sends it to a public notary who will then re-present it to the Drawee (Importer) on the same day it was r...

The goal of Supply Chain Finance is to improve cash flow and reduce financial risk for all parties involved in the supply chain. By providing financing options and risk mitigation techniques, Supply Chain Finance helps optimize working capital and liquidity management. There are two main categories of Supply Chain Finance. Receivable purchase products involve banks purchasing a portion or the entire receivable from sellers. This removes the receivables from the seller's balance sheet, transferring ownership to the bank. In return, the seller receives an advance payment with a margin for the bank. Loan-based products involve banks providing loans to sellers or buyers based on their receivables, purchase orders, inventory, etc. In this category, the receivables remain on the seller's balance sheet, but they are used as collateral for the loan. Both categories of Supply Chain Finance aim to provide financial support and flexibility to businesses in managing their cash flow and m...

Compliance in trade finance refers to the adherence to regulatory and legal requirements in conducting trade finance transactions. It involves ensuring that all activities related to trade finance, such as letters of credit, documentary collections, and guarantees, comply with applicable laws, regulations, and industry standards. Compliance in trade finance is crucial for several reasons: 1. Regulatory requirements: Trade finance transactions are subject to various regulations imposed by national and international bodies. Compliance ensures that these regulations are followed, reducing the risk of penalties or legal consequences. 2. Anti-money laundering (AML) and counter-terrorism financing (CTF): Trade finance can be vulnerable to money laundering and terrorist financing activities. Compliance measures help prevent these illicit activities by implementing due diligence procedures, customer identification processes, and transaction monitoring. 3. Sanctions compliance: Trade finance t...

An export contract is an agreement between two or more persons or entities in order to export goods in exchange for something valuable. Since the contract is made in order to perform an underlying obligation- the sale of goods, care should be taken in order to ensure that the export of goods is made in accordance with the relevant contract. Here below are the tips to ensure that the export of goods is in accordance with the contract: Supplies need to be ordered Goods must be manufactured by the manufacturer Packaging must be arranged. Transport and shipping space must be booked. Goods will have to be dispatched to the port, airport, or place of destination in time, or services delivered in a timely manner. All necessary documentation should be obtained and supplied by the export documentation department. The buyer should be advised of shipping details. All necessary documents must be submitted for payment directly to the buyer or via the banking system as quickly as possible. In summar...

The main difference between a Bill of Lading and a Sea Waybill lies in the ownership and transfer of goods during shipment. 1. Ownership: A Bill of Lading is a document that represents the title to the goods being shipped. It serves as evidence of the contract of carriage and establishes the carrier's responsibility for the safe delivery of the goods to their destination. The Bill of Lading can be negotiable or non-negotiable, depending on whether it can be transferred to another party. On the other hand, a Sea Waybill is a non-negotiable document that does not represent ownership or title to the goods. It acts as a receipt for the shipment and provides evidence of the contract of carriage but does not allow for transferability. 2. Transferability: A Bill of Lading can be transferred from one party to another through endorsement or delivery, allowing for easy transfer of ownership during transit. This feature makes it useful in international trade where parties may need to buy or s...

SBLC is an independent undertaking, the issuer of the SBLC has its own obligation to pay the beneficiary on receipt of a document made by, or on behalf of the beneficiary, which comply with the terms and conditions of the SBLC. Standby letters of credit is “irrevocable” meaning that it cannot be changed or cancelled prior to its stated expiry date without the agreement of all parties. Applicant should consider the following when deciding to use SBLC. Performance risk: The applicant should carefully review and understand the terms and conditions of the SBLC, including any performance requirements or conditions that must be met in order to draw on the SBLC. Failure to meet these requirements could result in loss of funds or other negative consequences. Legal risk: The applicant should seek legal advice to ensure that they fully understand their rights and obligations under the SBLC, as well as any potential legal risks associated with it. This includes understanding applicable laws and r...

SBLC is an independent undertaking, the issuer of the SBLC has its own obligation to pay the beneficiary on receipt of a document made by, or on behalf of the beneficiary, which comply with the terms and conditions of the SBLC. Standby letters of credit is “irrevocable” meaning that it cannot be changed or cancelled prior to its stated expiry date without the agreement of all parties. The beneficiary should consider the following when deciding to accept SBLC. A beneficiary must determine its credit rating of the issuer. Where an issuer’s credit rating, size or country risks are unacceptable to the beneficiary, a beneficiary may require an acceptable confirming bank. Fraud risk: There is a possibility of fraudulent SBLCs being issued by unauthorized parties or fake banks. Beneficiaries should thoroughly verify the authenticity and credibility of the issuing bank before accepting an SBLC. Beneficiary should ensure that SBLC wording complies with the requirements of the underlying contrac...

The relationship between the Incoterms rules and documentary credits is that they both play a crucial role in international trade transactions. Incoterms rules, which are published by the International Chamber of Commerce (ICC), provide a standardized set of terms defining the rights and obligations of buyers and sellers in international contracts for the delivery of goods. These rules determine who is responsible for various costs, risks, and tasks associated with the transportation and delivery of goods. On the other hand, documentary credits, also known as letters of credit, are financial instruments issued by banks that guarantee payment to the seller upon presentation of specified documents. Documentary credits provide security to both buyers and sellers by ensuring that payment will be made if certain conditions are met. The relationship between Incoterms rules and documentary credits lies in their complementary nature. When negotiating an international sales contract, parties of...