- •Unit 1. Why finance
- •5. Arrange and run a conversation on the following text:
- •Unit 2. Acquisition of capital
- •2. Read, translate and retell the text:
- •3. Look at the term in the left-hand column and find the correct synonyms or definitions in the right-hand column:
- •Unit 3. Money
- •2. Read, translate and retell the text:
- •3. Give English equivalents of the following:
- •2. Read, translate and retell the text.
- •3. Answer the following questions:
- •4. Match the following words and phrases in a meaningful way:
- •5. Discussion Points:
- •6. Read, translate and retell the text.
- •7. Fill each blank in the text with the correct word or phrase. Choose from the following list. Use each item once only.
- •8. Answer the following questions:
- •Unit 5. Exchanges
- •2. Read, translate and retell the text.
- •3. Give the Ukrainian equivalents of the following words and word combinations:
- •3. Arrange the words in pairs of synonyms:
- •5. Answer the following questions:
- •Unit 6. Accounting and bookkeeping
- •1. Read and memorize the following words and word combinations:
- •2. Read, translate and retell the text.
- •3. Translate into Ukrainian:
- •4. Find the English equivalents:
- •5. Answer the following questions:
- •Unit 7. Auditing
- •1. Read and memorize the following words and word combinations:
- •2. Read, translate and retell the text.
- •3. Find the following English equivalents in the text,translate sentences containing them into Ukrainian:
- •8. You are given below a list of financial one-word-terms. List all terms-phrases you can associate with them:
- •Unit 8. Taxes and Taxation
- •1. Read and memorize the following words and word combinations:
- •2. Read, translate and retell the text.
- •3. Say what you have learnt about:
- •4. Retell the text and then give your points of view on such problem questions as:
- •5. Discuss the following statements:
- •6. Indicate whether each of the following statements is true or false:
- •Unit 9. The basis of financial management
- •1. Read and memorize the following words and word combinations:
- •2. Read translate and retell the text
- •3. Translate into Ukrainian
- •4. Find the English equivalents:
- •5. Fill in the blank:
- •6. Answer the following questions:
- •Unit 10. Outside sources of financing
- •1. Read and memorize the following words and word combinations:
- •2. Read, translate and retell the text:
- •3. Translate into Ukrainian:
- •4. Find the English equivalents:
- •5. Fill in the blanks:
- •6. Answer the following questions:
- •Unit 11. Sources of unsecured financing
- •1. Read and memorize the following words and word combinations:
- •2. Read, translate and retell the text:
- •3. Translate into Ukrainian:
- •4. Find the English equivalents:
- •3. Give English equivalents of the following:
- •4. Define the terms:
- •5. Answer the following questions:
- •Unit 13. How to Buy Bonds and Stocks
- •2. Read, translate and retell the text:
- •3. Look at the term in the left-hand column and find the correct definitions in the right-hand column:
- •4. Find the English equivalents.
- •Unit 14. The language of stock
- •1. Read and memorize the following words and word combinations:
- •2. Read, translate and retell the text:
- •3. Find the English equivalents.
- •4. Answer the questions:
- •5. Look at the term in the left-hand column and find the correct definitions in the right-hand column:
- •Unit 15 International Finance
- •1. Read and memorize the following words and word combinations:
- •2. Read, translate and retell the text:
- •3. Questions for discussion:
- •4. Speak on the topics:
- •Texts for Additional Reading
- •1. The Bank of England
- •2. The Federal Reserve System
- •3. The Banking System of Ukraine
- •4. Financial Institutions
- •5. Bank Organization
- •6. Money and Currency
- •7. Bank Accounts
- •8. Bank Services
- •9. Bank Loans
- •10. International Bank Settlement System and Methods of Payment
- •11. Financial Statements at a Bank
- •12. Introduction to Corporate Finance
- •13. What Is Corporate Finance?
- •14. The Financial Manager
- •Figure 1. A simplified organizational chart. The exact titles and organization differ from company to company
- •20. A Corporation by Another Name...
- •21. The goal of financial management
- •22. The Goal of Financial Management
- •23. A More General Goal
- •26. Management Goals
10. International Bank Settlement System and Methods of Payment
In international trade delivery of goods and services generally takes longer and payment for them can take more time. So exporters need to take extra care inensuring that prospective customers are reliable payers and that payment is received as quickly as possible. Payment for exports depends on the conditions fixed in the commercial contract with a foreign buyer. There are internationally accepted terms designed to avoid confusion about cost and price.
This field of the international finance is a settlement system which consists of methods of payment that are agreed in the contract between the buyer and the seller (a. payment in advance, b. open account; c. Documentary Letter of Credit, d. payment upon shipment of the goods; e. documentary collections, f. Bills of Exchange; e. barter, buy-back, counter trade); and the instruments (where instructions are written) by which the payment is made, that is the methods of settlement (payment by check, bank transfer, SWIFT, draft, bank money order, TT (telegraphic transfer), MT (mail transfer), Bill of Exchange).
Payment in advance. It is the best possible method for the exporter. Cash with order (CWO) avoids any risk on small orders with new buyers and may even be asked for before production begins. However, this form of payment is extremely rare in exporting since it means that an overseas buyer is extending credit to an exporter - when the opposite procedure is the normal method of trade. Variations in this form of payment are cash on delivery (COD) where small value goods are sent by Post Office parcel post and are released only after payment of the invoice plus COD charges.
Open account. The goods and accompanying documents are sent directly to an overseas buyer who has agreed to pay within a certain period after the invoice date - usually not more than 180 days. The buyer undertakes to remit money to the exporter by an agreed method. This method is popular within the EEC because it is simple. (E.g. 70 per cent of UK exports are paid for under open account terms). It saves money and procedural difficulties but the risk to the exporter is obviously greater. It is only successful if an exporter trusts the business integrity and ability of an overseas buyer. A variation of open account payment is the consignment account where an exporter supplies goods to an overseas buyer, but the exporter retains ownership of the goods until they are sold, and then the buyer remits the agreed price to the exporter.
Bill of Exchange. An exporter can send a bill of exchange for the value of the invoice of goods for export through the banking system for payment by an over-seas buyer on presentation. The bill is called a sight draft if it is made out payable at sight, i.e. 'on demand'. If it is payable 'at a fixed future time' it is called a term draft, because the buyer is receiving a time period of credit, known as the tenor of the bill. The buyer signs an agreement to pay on the due date by writing an acceptance across the face of the bill. By using a bill of exchange with other shipping documents through the banking system, an exporter can ensure greater control of the goods, because until the bill is paid or accepted by the overseas buyer the goods cannot be released. At the same time, the buyer does not have to pay or agree to pay by some agreed date until delivery of the goods from the exporter.
Documentary Letter of Credit. It is the most accepted method of payment, because both an exporter and an overseas buyer have high degree of security in completing the commercial contract. It is issued by a buyer's bank (issuing) and transferred to a seller's bank (advising) with the order to open a credit to the seller. The necessary documents, correctly completed, are presented to a bank by the expiry date of the credit. If the terms of the credit are met an exporter can receive payment from the advising bank. Documentary LC may be revocable or irrevocable. Most LC are irrevocable, which means that the terms of the credit cannot be cancelled without both the exporter's and importer's agreement.