A Guide To Documentary Payments & Short-Term Trade Finance

International Trade & Advisory
Documentary Payments & Short-Term Trade Finance
 A Primer on Letters of
Credit, Documentary Draft
Collections, Import and
Export Financing, and
Other Banking Services for
Exporters and Importers
A Guide to
Documentary
Payments
Short-Term
Trade Finance
A Primer on Letters of Credit,
Import and Export Financing, and
Other Banking Services for
Exporters and Importers
Prepared by Walter (Buddy) Baker, ABN AMRO Bank
Table of Contents
Chapter One Introduction 1
Risks Involved in International Trade 1
Documentary Draft CollectionsAn Overview 2
Commercial Letters of CreditAn Overview 3
Standby Letters of CreditAn Overview 3
Bankers’ AcceptancesAn Overview 4
International Credit Terms/Payment Methods (Table) 4
Chapter Two Draft Collections 7
How Draft Collections Work 7
A Draft Collection Instructions Letter (Sample) 7
Documentary Sight Drafts 11
Documentary Time Drafts 11
Avalized Drafts 12
Choosing Among the Different Types of Documentary Drafts 13
Clean Drafts 13
Borrowing Against Draft Collections 14
Chapter Three Direct Collections 15
How Direct Collections Work 15
A Direct Collection Form (Sample) 16
Chapter Four Letters of Credit 18
How Letters of Credit Work 18
Parties to the Letter of Credit 19
Contents of the Letter of Credit 19
Some Uses of Letters of Credit 20
Why Use Letters of Credit 21
The Letter of Credit Cycle (Illustration) 23
Chapter Five Import Letters of Credit 27
Letter of Credit Mechanics on the Import Side 27
A Letter of Credit Application Form (Sample) 28
Revolving Letters of Credit 31
Installment Letters of Credit 31
Chap ...
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