Ex.4. Read the following statements. Say whether they are true, if not correct them.

1. The methods of securing payment from overseas customers are Banker’s Transfer, Letter of Credit and Bill of Exchange.

2. In case of a standard Banker’s Transfer money isn’t credited to the account of the Seller.

3. In case of paying by Irrevocable Letter of Credit the correspondent bank establishes the credit in the name of the Buyer.

4. L/C doesn’t have a validity interval.

5. L/C is usually opened against shipping documents.

6. When a company loses a major customer it can get into financial difficulties.

7. In case of Sight Draft the shipping documents are handed to the Buyer as soon as he pays for the goods.

8. The bank can’t accept bills on the Buyer’s behalf.

9. When you draw on your customer at sixty days the drafts are sent to his bank for collection.

Read and translate the following texts:

A draft is an order to pay. It is made out by an exporter and presented to the importer, usually through a bank. It is also called а bill of exchange, and it may be payable immediately on presentation (a sight or demand draft), or so many days after presentation (a term draft). In the latter case the drawee writes "Accepted" across it and signs his name. When a B/E has been signed by the importer, the exporter usually has to wait about 90 (or sometimes 180) days before it can be exchanged for money. Because a B/E is negotiable, the exporter may discount (sell) the bill at his bank before the 90 days have passed. The exporter has the money to start another transaction immediately and the bank collects the money when the B/Е is paid. The bank may rediscount the bill to a discount house which specialises in this work.

There are other methods of payment such as TT (telegraphic transfer) or mail remittance. They are given to a buyer only when he is a trusted customer or agent. If they let you down you’ve shipped your goods without any assurance of getting payment. But with a letter of credit the payment is guaranteed, at least when it’s confirmed and irrevocable which is the only type of L/C we accept nowadays. That means the bank at our end guarantees payment in case the opener of the credit defaults and the credit can’t be cancelled before the expiry date.

Answer the questions.

1. How may a draft be payable?

2. How long does the exporter have to wait before he can get his money?

3. Is a B/E negotiable? What does it mean?

4. What other methods of payment do you know?

5. When are they given to a customer?

A Bill of Exchange is a sort of post-dated cheque. Look at this Bill of Exchange and answer the questions about it.

Exchange for 750 pounds London 14 July 2000 At 90 days pay this solo Bill of Exchange to the order of ourselves _____________ the sum of seven hundred and fifty pounds sterling -------------------------------------------------------------- Value goods_____________ To Dom KK Signed Sheila Baker 705 3-chome Yamaguchi for BOS Ltd. Osaka 13 Mill Street Japan Harlow Essex CM 20 2TR Accepted M Satsuma for DOM KK

1. Which company will receive the money?

2. How many copies of the Bill are there?

3. What date will the Bill be paid?

4. Which company will pay the Bill?

5. Is this transaction “documents against payment” or “documents against acceptance”?