Original Bill of Lading would be provided to the exporter by shipping company when he safely loads the goods into the vessel, that original Bill of Lading must be available in the hands of an importer in order to clear the goods at his port.
Q. Which Payment terms should we accept in International Business?
Advance Payment
100% Advance TT against Proforma Invoice
How it works?
We need to send our FOB, CFR, CIF, etc. quotation via email & against it they will do telex transfer in our bank account, after receiving money we will send goods &Bill of Lading along with other documentations are couriered at his home / office to clear his cargo.
Documentation Against Payment via Bank
100% DP via Bank
How it works?
- Exporters send Proforma Invoice quotation via email.
- Importer accepts & send Purchase Order(PO) via email.
- Exporters visit ECGC Office near his area & gets PO Verified & gets ECGC Cover against PO
- Exporters ships the goods & receives BL from Shipping Line
- Exporters Provides that BL along with other documentation to his ICICI Bank
- ICICI Bank will send documentation to Bank of Singapore (Importers Bank)
- Importers need to visit Bank of Singapore, Pay the money & collect the Bill of Lading
- Exporter receives the money in his ICICI Bank.
- Importers provides that BL & other documents to his CHA to clear the goods from Port.
Documentation against Acceptance via Bank
100% DA via Bank with usance period of 5 days
How it works?
- Exporters send Proforma Invoice quotation via email.
- Importer accepts & send Purchase Order(PO) via email.
- Exporters visits ECGC Office near his area & gets PO Verified & gets ECGC Cover against PO
- Exporters ships the goods & receives BL from Shipping Line
- Exporters Provides that BL along with other documentation to his ICICI Bank
- ICICI Bank will send documentation to Bank of Singapore (Importers Bank)
- Importers need to visit Bank of Singapore collect the Bill of Lading & pay after 5 days of accepting the documentation
- Exporter receives the money in his ICICI Bank.
- Importers provides that BL & other documents to his CHA to clear the goods from Port.
Kindly Note: Both in DP or DA terms there are few limitations, one it that importer will not visit his bank to collect the documentation & exporter has to bring his goods back& in DA there are chances that he will collect his document & clear his goods & will not pay after usance gets end. So, in order to keep is most safe we need to have ECGC cover in these terms so that if the importer does some fraud then ECGC will pay. To keep it safer some proportion of advance payment is advisable, so that if provides some conformity that they are serious buyers
25% Advance TT against Proforma Invoice & 75% DP via Bank.
30% Advance TT against Proforma Invoice & 70% DA via Bank with usance period of 7 days.
Even in above terms ECGC Cover must be obtained.
Letter of Credit
100% Irrevocable LC at Sight
How it works?
- Exporters send Proforma Invoice quotation via email.
- Importer accepts & send Purchase Order(PO) via email.
- Exporters visit ECGC Office near his area & get PO Verified & gets ECGC Cover against PO
- Importer will prepare irrevocable LC Draft via his bank
- Exporter will visit his bank & accept this irrevocable draft. (The biggest advantage of irrevocable LC is that it could not be changed without exporter permission, so its considered as safest LC Draft)
- Exporters ships the goods & receives BL from Shipping Line
- Exporters Provide that BL along with other documentation to his ICICI Bank
- ICICI Bank will send documentation to Bank of Singapore (Importers Bank)
- Importers need to visit Bank of Singapore collect the Bill of Lading & pay at the time of accepting the documentation (as it was sight LC, in case of Usance LC he can pay after time period gets end)
- Exporter receives the money in his ICICI Bank.
- Importers provides that BL & other documents to his CHA to clear the goods from Port.
Kindly Note: The biggest advantage of LC is that if the importer fails to pay or refuse to visit bank to collect the documentation then bank will pay us. In actual bank block the funds of importer & then open the LC Draft to be provided to exporter, so when exporter submit original documentation, he is bound to receive the money.