The requirements of sales personnel and sales management personnel engaged in foreign trade are: in sales activities, the calculation of payment for goods should be accurate, the settlement of payment for goods should be timely, and the clearance of arrears should be vigorous. The final result of sales activities will be reflected in financial data. As a salesperson (especially a sales manager), in the process of carrying out sales work, he or she will inevitably encounter problems related to finance, such as payment, settlement, budget, etc. Obviously, a good financial knowledge background will help him or her to carry out all kinds of work smoothly. Therefore, we want to remind everyone that mastering the following foreign trade finance knowledge can make your foreign trade work more smoothly.
Common means of payment and settlement There are the following common means of payment and settlement in China:
Bills of exchange: including bank bills and commercial bills (commercial bills also include bank acceptance bills and commercial acceptance bills).
Bank promissory note: includes fixed bank promissory note and non-fixed bank promissory note.
Cheques: including cash cheque, transfer cheque and ordinary cheque.
Exchange: including wire transfer and letter transfer.
Delegated Collection: Including Delegated Collection in Different Places and Delegated Collection in Same Place.
Letter of Credit: Settlement Tool 1. Bank draft This is issued by the issuing bank. It is a bill that the bank unconditionally pays to the payee or bearer according to the actual settlement amount when seeing the bill. All kinds of money settlement by units and individuals can be made by bank draft. Bank drafts can be used for transfer, and bank drafts marked “cash” can also be used for cash withdrawal. Bank drafts have the following characteristics: no starting amount; No geographical restrictions; Enterprises and individuals can apply; You can apply for a cash bank draft when both the payer and the receiver are individuals. The validity period is generally 1 month; Cash bank drafts can be reported lost; Pay at sight; Refund can be processed within the validity period of the bill; 2. Bank promissory notes This is a bill issued by a bank that promises to unconditionally pay the specified amount to the payee or bearer at sight. Units and individuals can use bank promissory notes when they need to withdraw various amounts in the same bill exchange area. Promissory notes have the following characteristics: unlimited promissory notes have no threshold amount limit; All bank promissory notes are registered. The payee is a cash cashier’s note that an individual can apply for, and the cash cashier’s note can be presented by the principal to the issuing bank for payment. Bank promissory notes are payable at sight; The term of payment for bank promissory notes is generally not more than 2 months.
3. Cheques This is a bill issued by the drawer and issued by the bank entrusted to handle the cheque deposit business to unconditionally pay the specified amount to the payee or bearer when seeing the bill. All units and individuals can use the cheque for settlement in the same city. The drawer of the cheque shall open a deposit account unit and individual that can use the cheque in a bank institution approved to handle the business by the local branch of the People’s Bank of China. Cheques mainly have the following characteristics: there is no threshold amount limit; Cash withdrawal or transfer; The validity period is 10 days (counting from the date of issuance, the expiration date will be postponed if it is a holiday); You can report the loss.
4. Exchange This is a settlement method by which the remitter entrusts the bank to pay the money to the payee. This settlement method can be used for all kinds of money settlement by units and individuals. Exchange business mainly has the following characteristics: remittance is divided into telegraphic transfer and credit transfer, which are used by the remitter. Exchange is not limited by the amount starting point.
5. Entrusted Collection This is a settlement method by which the payee entrusts the bank to collect the payment from the payer. Units and individuals can use the settlement method of entrustment collection to settle the payment with the proof of the payer’s debt such as acceptance of commercial bills, bonds, certificates of deposit, etc. Entrusted collection business mainly has the following characteristics: no threshold amount limit; Both in the same city and in different places can be handled. There are two payment methods, mail and telegram, for the payee to choose from.
6. Letter of Credit This refers to the payment promise issued by the issuing bank according to the applicant’s application and paid by documents conforming to credit terms. Domestic L/C is a commodity transaction settlement instrument between domestic enterprises guaranteed by the bank.
Original Artical，Author：China Trade Agent，if repost，please give references ：https://offers-bg.com/salesman-must-know/