TÀI CHÍNH QUỐC TẾ - CHƯƠNG 4 pptx

Interest Rate, Exchange Rate and Payment Time 1.. Interest Rate, Exchange Rate and Payment Time... International Trade & Financial Support• Includes – Goods and Services – Financial Paym

CHAPTER IV: INTERNATIONAL TRADE

AND FINANCIAL SERVICES

1 International Trade & Financial Support

2 Interest Rate, Exchange Rate and Payment

Time

1 International Trade & Financial Support

2 Interest Rate, Exchange Rate and Payment

Time

1 International Trade & Financial Support

• Includes

– Goods and Services

– Financial Payments

• Risks

Delivery, Transport, Credit, Exchange Rate,

Payment Transfer…

• Includes

– Goods and Services

– Financial Payments

• Risks

Delivery, Transport, Credit, Exchange Rate,

Payment Transfer…

1.1 Methods of Payments

• There are 4 Payment and Sponsor Methods to transfer risks between buyers and sellers

– Cash deposit Advance

– Open Account

– Documentary Draft

– Letter of Credit

• There are 4 Payment and Sponsor Methods to transfer risks between buyers and sellers

– Cash deposit Advance

– Open Account

– Documentary Draft

– Letter of Credit

1.1.1 Cash Deposit Advance

• Buyer needs to deposit at Seller’s bank before delivery of Goods & Services

• Buyer bears Costs and Risks

Eg Wire Transfer, Credit Card…

• Buyer needs to deposit at Seller’s bank before delivery of Goods & Services

• Buyer bears Costs and Risks

Eg Wire Transfer, Credit Card…

1.1.2 Open Account

• Goods and Services are delivered before

Payment is made

• There is no interfere of third party

• Seller bears Costs and Risks

• More Transparency

• Used mostly in payment between associated

company or company with long-term relationship

• Goods and Services are delivered before

Payment is made

• There is no interfere of third party

• Seller bears Costs and Risks

• More Transparency

• Used mostly in payment between associated

company or company with long-term relationship

1.1.3 Documentary Draft for Collection

• Seller entrusts the collection of a payment to the remitting bank (Seller’s), which sends

documents to the a collecting bank (Buyer’s)

• Time of payment is given in the contract

• D/C involves a draft requires the importer to pay

(Documents against Payment – D/P) or on a

specific date (Documents against Acceptance –

D/A)

• Seller entrusts the collection of a payment to the remitting bank (Seller’s), which sends

documents to the a collecting bank (Buyer’s)

• Time of payment is given in the contract

• D/C involves a draft requires the importer to pay

(Documents against Payment – D/P) or on a

specific date (Documents against Acceptance –

D/A)

1.1.4 Letter of Credit

• Most commonly used method

• L/C is a guaranteed, given by the buyer’s bank, that will pay for the goods exported, on behalf of buyer

• Risk is bear by Buyer’s bank

• Other risk:

– Liquidity of Buyer’s bank

– Interbank Transfer

• Most commonly used method

• L/C is a guaranteed, given by the buyer’s bank, that will pay for the goods exported, on behalf of buyer

• Risk is bear by Buyer’s bank

• Other risk:

– Liquidity of Buyer’s bank

– Interbank Transfer

1.2 Other methods

• Credit payment of Buyer

• Payment of Account Receivable

• Using Intermediate Commercial Trade

• Purchase Exporter’s Account Payable

• Buy and Sell Credit

• Counter Trade

– Buy Back Agreement

– Compensation Agreement

• Credit payment of Buyer

• Payment of Account Receivable

• Using Intermediate Commercial Trade

• Purchase Exporter’s Account Payable

• Buy and Sell Credit

• Counter Trade

– Buy Back Agreement

– Compensation Agreement

2 Interest Rate, Exchange Rate and

Payment Time

• Adjusted Domestic currency to pay for export at t time is

At t = 0, the above equal

• Adjusted Domestic currency to pay for export at t time is

At t = 0, the above equal

• Let is the domestic interest rate, without

calculating the interest amount

• Without delay payment is execute when

• Let is the domestic interest rate, without

calculating the interest amount

• Without delay payment is execute when

Discussion question

List the common forms of payment used

in international trade? Compare the

benefits and risks in the forms above.