BUYING AND SELLING GOODS INTERNATIONALLY UNIT 8 International

BUYING AND SELLING GOODS INTERNATIONALLY UNIT 8

International sales transactions between sellers and buyers require an agreement on : the form of payment, payment conditions, transport conditions.

WHAT ARE THE POSSIBLE PAYMENT METHODS?

PAYMENT METHODS LETTER OF CREDIT "L/C" initiated by the buyer and directed to the seller. traditional worldwide risk management tool for international transactions. Issued by a buyer’s bank and confirmed by a seller’s bank, a Letter of Credit is the buyer’s bank's commitment to pay the seller's drafts. The buyer chooses the opening bank. Revocable vs. Irrevocable Letters of Credit In a revocable Letter of Credit, the buyer’s bank has the right to cancel or alter its obligation at any time before payment of a sight draft or acceptance of a time draft. That situation exists even if goods were shipped in reliance on the expectation of payment. An irrevocable Letter of Credit that is accepted by the seller, however, cannot be altered or canceled without the consent of the seller (of all parties). Confirmed vs. Unconfirmed An irrevocable Letter of Credit can be either confirmed or unconfirmed. In a confirmed Letter of Credit, the buyer’s bank agrees independently to the buyer's commitments to pay the seller the agreed-up amount of money, as long as all the requirements of the Letter of Credit are fulfilled. The usual conditions included in a Letter of Credit include delivery dates, product specifications and receipt by the bank of specific documents (such as bills of lading, inspection certificates, commercial invoices and packing lists). There may also be other terms and conditions as negotiated between the buyer and seller.

ADVANCE PAYMENT Payment made by the buyer to the seller prior to shipment. It is customary to only pay an agreed percentage of the value of the goods with the remainder paid after shipment. CAD Abbreviation for "cash against documents." Payment method requesting the seller’s bank to deliver documents only upon receipt of payment from the importer. (The same as, "documents against payment.") PROGRESS PAYMENT One in a series of payments made at stages in the performance of a contract. Examples would be payments made during the various stages of construction. OPEN ACCOUNT Relies completely on buyer to pay account as agreed. All terms of payment, including extra charges and terms should be mutually understood and agreed upon prior to open account initiation. Companies conducting ongoing business are candidates for open account terms of payment. Seller must measure not only buyer's credit reliability but the country's reliability as well.

RANK THE PAYMENT METHODS FROM THE LEAST RISK TO THE MOST RISK FOR THE SELLER. EXPLAIN YOUR RANKING. 1. ……………………………………………………………………….. 2. ……………………………………………………………………….. 3. ……………………………………………………………………….. 4. ……………………………………………………………………….. 5. ………………………………………………………………………..

What are the documents commonly used in foreign trade?

DOCUMENTS IN FOREIGN TRADE Pro forma Invoice – a draft invoice, which the seller prepares before the shipment takes place. It notes the kind and quantity of goods, their value, weight and transportation charges. The seller sends it to the buyer in advance for the purpose of his approval and checking for possible mistakes. They differ from a normal invoice in not being a request for payment. Commercial Invoice - A bill for the goods from the seller to the buyer. These invoices may be used by customs to determine the true value of imported goods when assessing customs duties and taxes. A commercial invoice must identify the buyer and seller, and clearly indicate the date and terms of sale, quantity, weight of the shipment, type of packaging, complete description of goods, unit value and total value, insurance, and shipping charges. Consular Invoice - A document that is required in some countries. It states the same information as the commercial invoice, but it is certified by the consular official of the foreign country stationed in exporting country. It is used by the country's customs officials. Customs invoice - Extended, more detailed form of commercial invoice required by custom (often in a specified format), for the purpose of determining customs import value at the port of destination. Bill of Lading - Document signed by a transportation company (carrier) to show receipt of goods for transportation. Someone must present the bill of lading at the point of delivery in order to claim the goods. On contrary, a waybill is not negotiable in this way and the transportation company will simply deliver the goods to the consignee. Airway Bill - Document signed by an airline to show receipt of goods for air transportation from and to the airports indicated.

DOCUMENTS IN FOREIGN TRADE Packing list - Itemized list of articles usually included in each shipping package, giving the quantity, description, and weight of the contents. Prepared by the shipper, sent to the consignee. Also called bill of parcels, packing slip, unpacking note. Forwarder’s Cargo Receipt - Document issued by a freight forwarder indicating goods have been received from the seller and are being held on behalf of the buyer. Bill of Exchange - A draft. Draft - Written demand for payment of a specified amount addressed to the buyer, called the "drawee," and signed by the seller, the "drawer." A draft may demand payment immediately upon presentation ("at sight") or on a specified maturity date. Certificate of Origin - It is a signed statement as to the origin of the export item. Certificates of origin are usually signed through an official organization, such as a local chamber of commerce, or can simply be a statement signed by the manufacturer or exporter as to the source of the goods. Inspection Certificate - A document that is required by some purchasers in order to attest to the specifications of the goods shipped. This is usually performed by an independent third party that will inspect the goods for conformity. Full Set - All signed originals of a document. For example, bills of lading are often issued in three originals, all having the same validity for claiming goods at the place of delivery.

what are the shipping terms used in foreign trade?

SHIPPING TERMS Part of a contract between a buyer and seller that specifies who is responsible for each aspect of shipping the goods; this may include responsibility for packing, arranging and paying for transportation and insurance, clearing customs, and so forth. INCOTERMS International Commercial Terms

C&F= CFR. Cost and Freight (Named port of destination) - the seller agrees to take full responsibility for delivering the goods to the port of loading, clear the goods for export, and arrange and pay for transportation of the goods to the named port of discharge, such costs being included in the price of the goods. It is up to the buyer to arrange marine insurance for the ocean voyage and transportation from the port of discharge. CIF Cost, Insurance and Freight (Named port of destination) - the seller agrees to take full responsibility for delivering the goods to the port of loading, clear the goods for export, and arrange and pay for transportation and marine insurance over the goods to the named port of discharge, such costs being included in the price of the goods. It is up to the buyer to arrange transportation from the port of discharge.

CIP Carriage and Insurance Paid to (Named place of destination) - the seller agrees to arrange and pay for transportation and cargo insurance over the goods to the named destination, such costs being included in the price of the goods. CPT Carriage Paid to (Named place of destination) - the seller agrees to arrange and pay for transportation of the goods to the named destination, such costs being included in the price of the goods. Nonetheless, all risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time the goods have been delivered to the carrier, is transferred from the seller to the buyer when the goods have been delivered into the custody of the carrier, at which point the buyer must arrange for cargo insurance if so desired.

EXW Ex Works (Named place) - Synonymous with "Ex Factory" - the seller fulfills his obligation to deliver when he has made the goods available at his premises (i.e., works, factory, warehouse, etc.) to the buyer. In particular, he is not responsible for loading the goods for export, unless otherwise agreed. The buyer bears all costs and risks involved in taking the goods from the seller’s premises to the desired destination. FOB Free on Board (Named port of shipment) - the seller fulfills his obligation to deliver when the goods have passed over the ship’s rail at the named port of shipment, all costs of inland transportation and loading being included in the price of the goods. The buyer has to bear all costs and risks of loss of or damage to the goods from that point.

PHRASAL VERBS IN BUSINESS COMMUNICATION A phrasal verb is a verb plus an adverb or preposition which creates a meaning different from the original verb. I will sort out this problem. SORT + OUT = SOLVE I ran into my teacher at the movies last night. run + into = meet If the phrasal verb is composed of a preposition or followed by a preposition, note that a nominal expression (ING-form of verb) must follow. I talked my boss into lettING me borrow the company car. I’ll get on to solvING the problem straight away.

Some transitive phrasal verbs are separable. The object is placed between the verb and the preposition. I talked my boss into letting me borrow the car. TALK+INTO=PERSUADE The assistant looked the phone number up. LOOK+UP= SEARCH Some transitive phrasal verbs are inseparable. The object is placed after the preposition. I ran into an old colleague yesterday. They are looking into the problem. LOOK + INTO=INVESTIGATE Some transitive phrasal verbs can take an object in both places. I looked the number up in the phone book. I looked up the number in the phone book. x BUT: I looked IT up in the phone book. (if the object is a pronoun)

CONNECT THE PHRASAL VERB (WITH PREPOSITIONS) WITH ITS SYNONYM: get back to take care of get on to see to find out look into get in touch sort out get down to contact back contact learn about arrange arrange resolve inspect

CONNECT THE PHRASAL VERB (WITH PREPOSITIONS) WITH ITS SYNONYM: Get back to take care of get on to see to find out look into get in touch sort out contact back arrange get down to arrange learn about inspect contact resolve

COMPLETE THE SENTENCES: We checked _______________ the hotel as soon as we arrived. Will you back me _______________ if I try to ask for promotion? Our company will think your price quotation _______________ and we will let you know. We ran _______________ of the petrol, we have to refuel soon. The pilot is ready, we will soon take _______________. The project coordinator will sort _______________ the quotations to choose the best one. The designer looks _______________ the material standard for the product. The WMS is not working properly, it mixed _______________ the data. Jack is not a very kind boss, he looks ___________ __________ his subordinates. The new manager came ___________ __________ some new solutions of supply chain.

COMPLETE THE SENTENCES: We checked in the hotel as soon as we arrived. Will you back me up if I try to ask for promotion? Our company will think your price quotation over and we will let you know. We ran out of the petrol, we have to refuel soon. The pilot is ready, we will soon take off. The project coordinator will sort out the quotations to choose the best one. The designer looks up the material standard for the product. The WMS is not working properly, it mixed up the data. Jack is not a very kind boss, he looks down his subordinates. The new manager came up with some new solutions of supply chain.

FIND THE CORRECT TRANSLATION: Připsat na účet Platba faktury Odeslat platbu Mít účet u Příkaz k výplatě Přijetí Výpis Bankovní převod Avízo o úhradě Statement Receipt Bank transfer Remit a payment Credit to account Have account with Payment on invoice Advice of remittance Draft

FIND THE CORRECT TRANSLATION: Připsat na účet Platba faktury Odeslat platbu Mít účet u Příkaz k výplatě Přijetí Výpis Bankovní převod Avízo o úhradě Credit to account Payment on invoice Remit a payment Have account with Draft Receipt Statement Bank transfer Advice of remittance

SEEM, APPEAR, TEND, CLAIM In business communication it is important to use polite language. We use passive constructions, verbs such as seem, appear etc. We may use infinitive after the verbs seem, appear, tend, claim: He seems to be rich. He appears to be rich. You tend to talk too much. She claims to be reliable. - Obviously, continuous infinitive and perfect infinitive also may be used: He claimed to be replying emails. (He claimed that he was replying the emails.) You seem to have known him long time. (It seems that you have known him long time.)

MAKE A NEW SENTENCE USING THE VERB IN BRACKETS: The manager is worried about the new advertising campaign. (appear) … Gina knows many important customers. (claim) My colleague forgets many things. (tend) … Your communication skills have improved. (seem) … He is considering our proposal. (seem) …

MAKE A NEW SENTENCE USING THE VERB IN BRACKETS: The manager appears to be worried about the new advertising campaign. Gina claims to know many important customers. My colleague tends to forget many things. Your communication skills seem to have improved. He seems to be considering our proposal.

WRITE THE FOLLOWING EMAILS. USE THE PHRASES FROM TEXTBOOK PP 62, 63, 66, 67: Your company has exported goods to an XY company. You ask them to pay 3654 EUR for order No 786. Request a payment: .............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

An hour later a partner from the XY company, Mina, informs you about your mistake. You sent her an invoice for 6354 EUR. The transport costs were not specified. The dimensions of goods were not correct. She wants you to correct the invoice. - Write Mina’s email informing you about your errors in diplomatic language: .............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

You realize your mistakes, apologize and take an action: ............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................. - Mina arranges the payment and informs you in the following email: .............................................................................................................................................................................................................................................................................................................. - You acknowledge the payment in the following email: ..............................................................................................................................................................................................................................................................................................................

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