Several payment methods of FOB transaction

FOB (Free on Board), also known as "Free on Board", is one of the commonly used trade terms in international trade. For the transaction under FOB conditions, the buyer is responsible for sending a ship to receive the goods, and the seller shall load the goods on the ship designated by the buyer at the port of shipment stipulated in the contract and within the specified time limit, and notify the buyer in time. When the goods are loaded on a named vessel at the port of shipment, the risk passes from the seller to the buyer.

Second, the transaction method

1, letter of credit (L/C for short), with various types;

2. Remittances mainly include T/T, M/T and D/D at sight;

3. Collection mainly includes D/P and D/A. ..

D/P means D/P. After delivery, we will prepare our negotiation documents and send them to the customer's bank through our bank. The customer's bank will remind the customer that the documents have arrived, and the customer will deliver the documents after payment.

D/A is D/A, and D/A is also delivered to the customer's bank through our bank. The difference is that customers can only take the original documents when they accept our documents, and then pay them when they are due.

T/T is telegraphic transfer (documents are usually mailed directly to customers by us without going through the bank). If we use T/T payment method with our customers, the general practice is that the customers will give us 30% advance payment, and the remaining 70% general insurance method is that the customers will pay with the original bill of lading faxed by us after the goods are shipped, and then mail the full set of original documents to the customers after receiving the payment.

The payment method of letter of credit belongs to bank credit and is a very safe payment method. However, the issuing bank must have a good reputation. Documentary personnel should carefully examine the documents, and the company's business, warehousing, transportation and documentation departments should coordinate to avoid discrepancies in documents.

Documents against payment

documentary against acceptance

The difference between D/P and D/A is that D/P must be paid, and the bill of lading must be paid first. If the bank releases the bill privately, the responsibility lies with the bank; The importer of D/A can pick up the bill of lading after paying the payment XX days after accepting the bill of exchange. If they fail to pay within the time limit, the bank will not be responsible.

D/P Documents with payment is a way to deliver documents under documentary collection, which means that the exporter's documents are paid by the importer, that is, the importer can only collect documents from the collecting bank after paying.

D/P at sight means that the exporter draws a draft at sight, and the collecting bank reminds the importer that the importer must pay after seeing the bill. After payment, the importer gets the shipping documents.