Import & Export Document Process, Negotiation and Payment

What is the meaning of Negotiation?

“Negotiation means the purchase by the nominated bank of drafts (drawn on a bank other the nominated bank) and/or documents under a complying presentation, by advancing or agreeing to advance funds to the beneficiary on or before the banking day which reimbursement is due to the nominated bank”.

Negotiation and Payments also cover the following :

  • What are the conditions for Negotiations?
  • How the Documents are Checked?
  • How the Discrepancies are handled?
  • What are with and without Recourse?
  • What are the Settlement procedures?
  • What is Endorsement on another bank’s Documentary Credits?
  • What is Discounting?
  • What are the Difference between Payment and Reimbursement?

Guidelines for Documentation under Letter of Credit  (both import and export)

  • Have all documents been properly signed?
  • Are the necessary documents presented in the prescribed form and number (originals and copies) UCP Art. 17.
  • Do all the documents relate to the same delivery and to the same documentary credit?
  • Are the details given in the documents consistent with each other (e.g. dimensions, weights, number of packages, markings etc)?
  • Where necessary, have all documents been legalized and/or certified (UCP Art.3)?
  • Have any corrections (e.g. on the transport or insurance documents or certificates of origin) been authenticated by the issuer?
  • Check whether all certificates (e.g. analysis certificates) have been signed and dated
  • Have partial deliveries been sent contrary to the documentary credit provisions?
  • Are all documents issued by the documentary credit beneficiary drawn up in the same language as used in the credit.
  • Is the documentary credit still valid?
  • Have the shipment dates been complied with?
  • Can the documents be presented to the bank within the prescribed period after shipment? If the documentary credit does not contain such a provision, a period of 21 days applies as per UCP Art.14c.
  • Do the Covering Schedule Instructions are clear?
  • Are the documents listed in the cover schedule are received and the count of each documents are correct?
  • Is there any interest for usance period to be collected and the rate of interest are given in the cover schedule?
  • In case of non-payment Noting and Protest need to be done?
  • Transport documents are properly endorsed?
  • Any avalization  of Draft(s)/Bills of Exchange are request (for Documents Against Acceptace)?

Guidelines for Negotiation and Payments

  • What is Bank’s Role?
  • What is the meaning of Negotiation?
  • What are the conditions for Negotiations?
  • How the Documents are Checked?
  • How the Discrepancies are handled?
  • What are with and without Recourse?
  • What are the Settlement procedures?
  • What is Endorsement on another bank’s Documentary Credits?
  • What is Discounting?
  • What are the Difference between Payment and Reimbursement?

Bill Discounting?

“An accepted draft or bill of exchange sold for early payment to a bank or credit institution at less than face value after the bank deducts fees and applicable interest charges. The bank or credit institution then collects full value on the draft or bill of exchange when payment comes due”.

  • What are the difference between bill discounting and bill negotiation?
  • How discounting is support to business?
  • What are the Advantages and Disadvantages of  Bills Discounting?