Tiểu luận risks in international payment operations in vietnam and the restrictions

INTERNATIONAL FINANCE Group : Risks in international payment operations in Vietnam and the restrictions CONTENTS A,OVERVIEW…………………………………… …………………………………… …………….…………………………………1 B, RISK IN INTERNATIONAL PAYMENT …………………………………………….……………………………………… I, Based on main cause…………………………………… …………………… ……………….……………………………….3 1.Commercial Risk…………………… …………………………………… …………………… ……… ………………………3 2.Risks in exporting credit loan …………………………………… …………………… ………… ……….…………….4 3.Risks in exchange rate …………………………………… …………………… …………………………… ………… 4.National risks …………………………………… …………………… …………………………… ………………… ……….5 5.Moral hazard …………………………………… …………………… …………………………… ………………………… 6.Legal risk …………………………………… …………………… …………………………… ………………………………….5 7.Operational risk…………………………………… …………………… …………………………… ……………….……….5 II, Based on payment methods ……… …………………… …………………………… …………………………6 1,Risk of Remittance……… …………………… …………………………… ……………………………………….……….6 2,Risk of Open-account method……… …………………………… ……………………………………………….…….6 3,Risk of Collection ……… …………………………… ……………………………………………………………….……… 4,Risk of Document credit method ……… …………………………… …………………………………………………7 C ACTUAL SITUATION OF INTERNATIONAL PAYMENT OPERATIONS OF JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM ……… ……………………………………….… …8 I OVERVIEW OF BUSINESS ACTIVITIES OF JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM ……… …………………………… …………………………………………………………………… Overview on the process of formation and development…… ………………………………………….…8 Some basic indicators… …………………………… …………………………………………………………………… II ACTIVITIES OF INTERNATIONAL PAYMENT OF VIETCOMBANK IN 2008-2010……………….…….8 Activities of payment for import and export……………………………………………………………………… Payment cart operations …………………………………………………………………… Exchange rate risk prevention …………………………………………………………… 4.Exchange rate risk governance in payment of import and export operations…………… ….9 III FACTORS IMPACT ON ACTIVITIES OF INTERNATIONAL PAYMENT ……………………… 10 1.Factors from outside of bank…………………………………………………………… ….10 2.Factors from inside of bank…………………………………………………………… …… 11 IV SOLUTIONS TO STRENGTHEN RISK IN INTERNAIONAL PAYMENT OPERATIONS OF JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM……………………………… 11 Diversification of international payment services ……………………………………………11 Development of the Bank agent system………………………………………………………12 Strengthen to attract customers in the various economic sectors ….……………………… 12 The capacity of payment officer…………….…………………….………………………………………………………12 Improving technological innovation of payment………….………………………………………………………12 IV SOME RECOMMENDATIONS………………………………….……………………………………………………………12 Recommendations for the Government ……………………….………………………………………………………12 Recommendation for the State Bank……………………….……………………………………………………………13 D Limits on international payment ……………………….……………………………………………………………… 14 E, RESTRICTIVE MEASURES AND PREVENTING RISKS IN INTERNATIONAL PAYMENT ……………………….……………………………………………………………….………………………………………………………16 I, For commercial banks ………………………………………………….………………………………………………………16 II, For the state bank ………………………………………………….……………………………………………………………16 III, For the Goverment……………………………………………….…………………………………………………………….17 IV For importers and exporters ……………………………….…………………………………………………………… 17 1, General solution……………………………….……………………………………………………………………………… 17 2, Solutions to limit the risk to the importer…………………………………………………………………………… 18 3, Solutions to limit the risk to the exporter ……………… ………………………………………………………… 18 A - Overview Risks are sudden occurrences that cause damage to people and property + The risk is unpredictable The risk has unpredictable consequences + Risk raise damage to humans and asset + Risk is an unexpected event - - A international payment system is a system used to settle financial transactions in bond markets, currency markets, and futures, derivatives or options markets, or to transfer funds between financial institutions Risk of international payment operations : + Are the economic risks arising in the process of making international payments It is due to issues arising from parties involved in international ypayment operations (exporters, importers, banks, intermediaries, etc.) or objective factors such as natural disasters, war , + Risk of international payment operations It is related to trading nations It is like the risk of domestic commercial transactions, but more complicated due to geographic distance, cultural and laws B, RISK IN INTERNATIONAL PAYMENT I Based on main cause: Commercial Risk: - This risk appears in almost every transactions between traders, so it has to be considered in different ways from exporters and importers 1.1 To the exporters, risks came from these reasons: • The weakening in buyers’ financial (importers) In this situation, the buyers unexpectedly become inability to pay in the maturity time, they will propound to extend the payment Sellers have to accept if the buyer cannot reform their financial situation • Legal regulations: if the buyers pronounce that they are not able to afford the debt, that corporation will be dissoluted based on law The debt from importing transaction will only be paid after priority debt such as wage, tax, debt from social organization,… so there will be less chance to retrive the amount of money from the buyer 1.2 To the importers, risks came from these reasons: • Delivery time: Based on the contract, the importers must receive the • • • goods during the time to maturity Every delay in the transporting process from the exporters will make it difficult for the importers to receive, therefore, will have a damage The change in rules and time: Sometime the signed commercial contract clearly stated time and conditions, however, the exporters unilateral change, forcing the importers to pay all the amount one time to receive the goods This makes buyers not afford to solve and have to borrow money from the bank to make a payment If the amount is too large, buyers may not be able to borrow, this will affect to the transporting process Price element: During the implementing process, with specific reasons such as politic , calamity, the exporters will offer the importers to pay a higher price the in the contract In this situation, the buyers can refuse and find new exporters, however, this will be slower Most of the time, buyers have no choice and obliges the high price which deprives the profit Insurance risks: In the signed commercial contract, if there are’t any strict managerment in both parties, the transporting process will have strong consequence Even the goods will have the compensation from the insurance companies, however, it will be lower than the real price Quality and source of the goods: Goods which cannot reach the standard in the contract or in the name will be problems for importers in relationship with customs, taxes,… For example, the contract pronounces that the goods are taken in A countries, exporters cannot take from the B countries If customs find out, importers have to pay the fees Risks in exporting credit loan: - Risks happen when commercial bank accepted to make a credit for customer to make international payment - Cause: • Subjective:  Ability to aplicable regulation and the staff capacity in the appraisal process the loans, services before making money transfer, collections, L/C, advance payment, BE discount,…  The affair of payment conditions, change in L/C, endorsment and BL guarantee • Objective  Banks depends on the commitment to pay for the beneficiary if they can show the documents Banks, in that situation, both provide credit for the opener and make the payment  The bank negotiation, after discount, if there is a mistake or preserve the recourse from the exporters, can take the risks of not being paid by the issuing banks or refunding banks • Risks in exchange rate - Exchange rate risk is the risks happen when the payments are fixed by foreign - currency When the rate fluctuated comparing with the price in the exporting contract will effect on both importer and exporter Effect: • To the exporter, the change in price will break the plan, such as the domestic currency is higher than foreign, the amount of money they get will be less which make the enterprise to be lost Furthermore, it will affect the funding in domestic from banks to manufaturing business • To the importer, the currency to make payment and in counting are not the same will make risks for the importers when there is a change in exchange rate If the domestic currency are lower than foreign currency, the amount of money they have to pay is higher than the real price • To the commercial bank, the management of foreign currency and foreign currency trading is very important If the rate is higher, there will not be enough money to provide and on the contrary, if the rate is lower, there will be a loss in price National risks - National risk is the risk involve in the change in politic, economics, foreign - exchange and trade management of a countries will affect both exporter (cannot take the money) and importer (cannot take the goods) These risks are from objective causes such as war, politic crisis, embargo and low foreign exchange reserve Moral hazard: - Happens when one party deliberately not to fulfill the obligations which leads - - to others’ benefit The importer can delay, refuse to pay or catch the bug in documentations, make price pressure to get profit, while the exporter can deliberately deliver unsuitable goods, but showing all the reasonable documentations to take the trust or fake documents Moreover, the carrier can take the money from the seller and disappear or sell it to another buyer, and the bank can delay, or take too much time or refuse to make payment for the exporter Legal risk: - Legal risk happens when there is dispute or complaint between parties The problems is about which country’s court will receive and under which country’s law Operational risk - Operatonal risk is The risk of loss resulting from inadequate or failed internal - - processes, people and systems or from external events Causes: • Internal Factors Inadequate processes, failure of existing systems, inefficient hardware and server maintenance contribute to banking operations being adversely affected The onset of manual errors and erroneous communication also occurs as a result of a huge workforce • External Factors External factors such as natural disasters, political upheavals, weak financial policies of the state, and criminal fraud have only compounded operational risks Most organizations accept that their people and processes will inherently incur errors and contribute to ineffective operations In evaluating - operational risk, practical remedial steps should be emphasized in order to eliminate exposures and ensure successful responses Poor operational risk management can hurt an organization's reputation and cause financial damage I Based on payment methods Risk of Remittance In a remittance transaction, as the role of intermediary bank between drawer and drawee, banks can not intervent in the goodwill of drawee towards beneficiary - To the Importer: after payment, buyer goes to bankrupt or makes wrong quantity, low quatlity or delay as agreement - To the exporter: if importer makes the payment after transaction, the capital tie-up easily spreads - To the impoter’s bank: risk happens when banks lease buyers to receipt goods but their quality is not well, making the insovent of the buyers then leads to the loss - To the exporter’s bank: o Risk happens when the bank lease to export goods but the buyer can not retire the money o Also, out-dated technology in transfering money leads to the wrong place and the amount of money Risk of Open-account method Only buyers get risk in this method: although goods are sold, sometimes Exporter did make the transfer of ownership but the payment is not guaranteed Risk of Collection Essentially, exporters get risk o o o - • • Non-acceptance of documents risk Non-payment risk Risk of delivery of goods to the importer withour origial shipment documents To the importer: in collection rules, the buyer takes responsibility to pay immediately or accept bill of exchange beforce receive goods, thus they could not check them, leading the fact that the goods are not packed rat the right quality as agreement before To the immediary banks Selling bank: risk happens when the bbank discount the documents but the importer refuse to make the payment or accept bill of exchange Collecting bank: risk happens when supply credit for customer but importer’s goods are difficult to sell Risk of Document credit method - - - - - To the issuing bank: in this type of payment, banks are not only the intermediary but also attenders, who make the deal to pay on the behalf of buyer, which means the issuing bank would pay for beneficiary even though the applicant not pay or the L/C transaction Also, if L/C could not cancel after issued, issuing bank has no right to declne or fix the content, but only notice the mistake within days after receive relatng documents And if out of that date, the issuing bank lose the right to refuse and the bank must bear all risks To the notifying bank: the notifying banks must define the encoding of issuing bank, if not, notifying bank must note in L/C notice to the exporter If the bank not notice carefull, rosk would happens for bith notifying bank and exporter To the negotiating bank: If banks attending the transaction could not notuce the mistakes or pass small ones, after the transacion, negotiating bank would bear all risks of issuing bank refuse the payment To the exporter: Banks only the transaction according to the documents, thus exporters must pay even the goods at bad situation Also, if the buyer intiatively create fake documents, importers would bear all risk and loss C ACTUAL SITUATION OF INTERNATIONAL PAYMENT OPERATIONS OF JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM I OVERVIEW OF BUSINESS ACTIVITIES OF JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM Overview on the process of formation and development VCB, formerly Foreign Exchange Management Department under the Vietnam National Bank was established on January 20, 1955 under Decree 443/ TTg of the Prime Minister In May 2008, VCB completed equitization process in the form of retaining state capital and issuing new shares representing 30% of charter capital, officially moved into Joint Stock Commercial Bank for Foreign Trade of Vietnam Some basic indicators 2.1 Scale of total assets and equity Total asset growth is quite stable over the years, but VCB’s equity has disproportionate growth in the period of 2009-2015 2.2 Scale of total assets and stock market capitalization In the period of 2009-2015, the scale of assets and market capitalization of VCB have stable growth in conditions of banking operations with many difficulties and bank business environment with complicated changes, diversified risk, stock market fluctuation 2.3 Some other targets and business activities The basic indicators on outstanding loans to profit before tax and after tax increased quite stably, at a high level over the years of 2009-2015, the target of net profit after tax is basically stable, increasing slightly in the years of 2014-2015 Vietcombank securities trading company- VCBS with profit before tax reached 119.68 billion dong; in 2015 reached over 92.0 billion dong The most recent time that is the end of 2015, the company implement financial leasing with more than 41.0 billion dong in pretax profit, without reaching the plan II ACTIVITIES OF INTERNATIONAL PAYMENT OF VIETCOMBANK IN 2008-2010 Activities of payment for import and export Payment for export Payment for import 2006 32% 2007 29% 2008 27% 2009 22% 2010 20% 23% 20% 20% 19% 19% In 2010, VCB reached sales of payment for import and export is 19% and 20% 10 Payment cart operations The number of international cards developed by VCB accounts for 34%, domestic cards account for 19% and VCB's international payment cards account for 53% of the national card market share Exchange rate risk prevention VCB full issued regulations on foreign business executive direction, about the purchase rates and sale rates, on foreign currency trading with customers in international settlement operations, open L/ C guarantee under the provisions of the Foreign Exchange Management Ordinance, the provisions of the State Bank and other relevant provisions of law and monitoring implementation and full implementation, seriously issued regulations VCB implements flexibly monitoring of the fact Besides, exchange rate risk preventive activities have also many inadequacies, in the period of 2009-2015, many of the document have been refused payment by abroad bank Overall, during the period of 2009-2015 by different ways VCB performed exchange rate management, but not really completion 4.Exchange rate risk governance in payment of import and export operations In the period of 2009-2015, despite many difficulties, challenges from the economic context and the increasingly fierce competition from rivals, along with measures to basic exchange rate risk prevention to be deployed has a positive impact on the operational results of import-export payments and foreign currency trading, the two fields are still growing through the years 11 Chart 2.1 Developments of international payment services and trade finance among months in 2015 of VCB In 2015, VCB reached sales of foreign currency trading increased 3.7% compared to the year of 2014, remittance increased 11.8% III FACTORS IMPACT ON ACTIVITIES OF INTERNATIONAL PAYMENT Factors from outside of bank 1.1 - Macroscopic policy from State Foreign exchange management policy Tax policy External economics policy 1.2 The change of political regime economy of others country The economic slowdown will adversely affect the commercial liberalization, woolenbusiness activities of enterprises from which affect international payment operations Changes in a country's policy as changing the storage regulations, taxation, foreign exchange, import and export charges or simply legal environment, the economy of a country is not yet stable and frequently change makes the partners not foresee the situation affecting the ability to pay Thus causing damage to the parties involved in that Bank 1.3 Factors from customers If the Bank can collect large amounts of shouted regular customers have active importexport business will develop international development payments In addition the situation in production and business activities, financial capabilities, professional level of foreign trade, the moral behavior of customers also affected the operation of the Bank's international payment Factors from inside of bank 2.1 Organization of the operating management of activities of international bank payment 12 A management system operate from central to local to the branch to follow a specific process compact delivered right to the initiative for the branch going to cum arecost, time payment is secure and attract customers to the Bank to be more because their rights are guaranteed 2.2 Professional level of Banking Officer - Requires Bank officials must have high qualification - Requires Bank officials must have a certain foreign language proficiency 2.3 Bank technology The criteria of international payment operations is timely and accurate quickly so Bank's advanced technologies are used in order to better implement the criteriaon 2.4 bank network agent Bank network agent all over the world making make payments fast, correct address, reduce costd and minomize risk IV SOLUTIONS TO STRENGTHEN RISK IN INTERNAIONAL PAYMENT OPERATIONS OF JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM Diversification of international payment services Currently, the value of international payment by document credit method them from still occupy a fairly high rate of international payment turnover in cages at Bank VCB, mainly focused on two L/C : L/C irrevocable, L/C irrevocable and confirmed Therefore,VCB may be made to diversify the types of L/C lays his TTQT market expansion: - For commodities are trading through intermediaries can apply the appropriate payment type such as letter of credit-backed armour, letter of credit transfer - For outsourcing delivery cycles should apply the credit method as the periodic credit - For goods and products are food products, agricultural products and quickly deteriorate should apply the letter of credit balance to ensure the implementation of the contract the two parties of import and export - VCB need to develop services for payment cards, traveler's cheque more to meet the needs of the customer's payment in domestic and abroad 13 Development of the Bank agent system Continue to maintain and strengthen the relationship with the Bank to maintain its credibility in the market - Expand the relationship with agent banks in many different countries to meet the needs of the customer's payment Strengthen to attract customers in the various economic sectors - For the big client is the regular business payments through VCB with high turnover should have the priority in the payment as regarded them as the first object to provide the new payment service (electronic bank account management via the network ) prioritizing inspection certificate from the free trade, consultant - For customers who not regularly to bank transaction VCB can apply various incentives, best served their requirements, given the benefits that they will get when making payment VCB versus made in others bank The capacity of payment officer - Bank officers are required to have high qualification - Bank officers are required to have a certain foreign language proficiency Improving technological innovation of payment – Should make the capacity of existing machinery systems, proceed to reduce the work sheets with the use of computer systems and networks - Diversification of distribution channels such as additional payment service on the web, - Constantly upgrading and purchasing equipment to perform international payments IV SOME RECOMMENDATIONS Recommendations for the Government - Have a favorable economic environment for international payment operations - improve and complement the legal documents regulating activity of international payment - Improving the quality of the macro on the operating of money, credit - Develop exchanges set up relationships with the countries in the region and the world in order to create favourable conditions for active support of imported woolen - Reform of the administrative procedures in order to create favorable conditions forbusiness activities related to export and import 14 Recommendation for the State Bank - Improve the legal corridor - Flexibly controlling the tools of monetary policy - Strengthen inspection, supervision of credit institutions and the construction of early warning system - Enhance the role of the national credit information center D Limits on international payment In the international trading, the payment of goods is the basic rights and obligations of both buyers (importers) and sellers (exporters) Therefore, when negotiating about the payment methods, parties attempt to agree on the terms of payment that have the most benefits for 15 their own Risks, limitations are things that each payment method could not avoid * In international payment, importers require their banks to transfer a certain amount of money to exporters in a certain location by means of remittance provided by the importer - In many cases, importers will not transfer money to the exporter until they receive full goods This is an advantage for importers but it is risky for exporters when the goods have been delivered but the cargo is not paid, delayed payment or inadequate payment - However, the importer may also bear the risk, especially in the case of money transfer before delivery as: receiving all the goods before delivery, deposit, advance payment and if money has been delivered but goods are not delivered on time, in the right quantity or quantity * Open account applies to the international payment: Exporters after complete their obligations (usually delivery obligations) specified in the contract of international payment will open a debit note The importers after a period of time (agreed by the two parties) have to pay for exporters - This method is completely beneficial to the importer The exporter will bear the risk when the importer fails to pay or delays payment or inadequate payment - The seller is actually lend the buyer the loan for the deferred payment, but the seller is also counts interest on the deferred payment Thus, the goods after the delivery to the buyer, the seller receives only part of the amount of money, so even though there is interest on the deferred payment, the risk to the seller is still high Buyers can solve the problem of shortage of capital instant, but they have to pay a higher price because they have to pay interest * A/P( account payable) is a method of payment applied in the international payment, where the importer's bank, as the request of the importer, provide a document request to the exporter’s correspondent bank issuing an A / P- pledged to buy a bill of exchange with the condition that the document presented suitable to the conditions that set in the A / P and must be verified by the representative of the importer - A/P is applied mainly in contracts for the purchase of machines, equipment, technical and high technology products Basically, this method means that the importer through their bank in the importing country transfers money to bank in the exporting country to authorize the bank to pay the bill of exchange issued by the exporter - This method of payment is quite safe for exporters, but there will be many disadvantages for importers when the money has been exported but it is unlikely to receive goods or receive poor quality goods or delayed delivery In order to limit the risk to themselves, the importer should specify the specific conditions, details and detailed payment procedures if applying the A / P method to avoid their disadvantages later 16 * If the partner is not trusted or the fraudulent partner, it is most likely the business will be fooled by fake papers Besides, conflicts between goods and documents are also important, as goods imported likely will be confiscated by customs because there is no match with documents E, RESTRICTIVE MEASURES AND PREVENTING RISKS IN INTERNATIONAL PAYMENT: I, For commercial banks: 17 Modernize the international payment technology of banks on the basis of international level Banking technology is one of the key determinants of the success of banking Therefore, commercial banks need to invest in strengthening the technology base, increasing the exploitation of utilities and creating value added products for customers Modernizing the technical basis to meet the requirements of increasing the volume of international payment, integrating with the region and the world - To pay special attention to the training of the contingent of staff members in terms of professional skills, foreign language qualifications, legal knowledge, professional ethics, risk prevention awareness, international practices and customs The customs of the country have foreign trade relations The experience of many countries in the world and the region shows that training is one of the success factors for the development of the country in general as well as of each commercial bank in particular Therefore, in order to minimize risks in international payment operations in particular, it is necessary to train a contingent of managers and professional staff who are qualified, capable and qualifiedm are really mportant and necessary - Enhance the risk management capacity for the management team, at all levels and strengthen the inspection and supervision of risks in international payment activities - Strengthening risk prevention information Banks need to keep up to date on economic information, especially risk prevention information, in order to minimize the risk to the international payment process of commercial banks To select and apply appropriate methods and tools to prevent and limit risks according to international practices and standards Strengthening external relations with foreign banks Commercial banks need to establish and strengthen networks of correspondent banks and representative offices abroad By providing information, support for hearted business customers and carrying out international payment activities efficiently, safely and quickly II, FOR THE STATE BANK - Strengthening the inspection, monitoring and evaluation of safety of the commercial banking system Coordinate with ministries and sectors to complete procedures and regulations for international payment operations for the whole Building a technology system that ensures the collection of necessary administrative information for the bank in a timely manner as a basis for the bank's business decisions III, For the State: - Expanding economic, cultural and political cooperation with other countries in the world The expansion of relations, help information between countries is transmitted quickly, smoothly Minimize 18 unnecessary repository Or hard work in import-export procedures Minimize time to solve problems for businesses of the two countries - To create macroeconomic stability and further perfect the policies and laws : To create an open, stable and favorable economic environment, enabling enterprises to develop in line with the requirements of the economic organizations, international trade regulations and regulations that we participate in - Improve the quality and ability of officers to participate in international payment management: It improves the ability to analyze financial situation and develop an early warning system Increase the ability to resolve disputes as well as support enterprises to participate in international settlement - Improve the quality of CIC's operations (Credit information center) - Consulting, supporting enterprises to access information about international market The government should support businesses with information, legal advice, financial resources to join the international market closely, to avoid the risk of business in the state of disadvantage , Lack of information, lack of equality IV For importers and exporters : 1, General solution: _ Research partner information Include: financial capacity, biography, field of operation _ Consult the bank on the business process of the partner _ Analyze and understand the process of fining penalty _ Reduce exchange rate risk : when it change, it can price’s good to increase or decrease So Exporters/importers should choose strong currencies or use derivatives to minimize risk, as futures contract, options contract,… _In addition, international legal business often occurs legal disputes To overcome, limiting legal risk should : + Raise the awareness of business on international trade laws + Use staff who have full capacity, skills for interational payment + Create the habit of using lawyers, legal experts in international trade activities 2, Solutions to limit the risk to the importer: _ Strict requirements, consistency between the content and forms of documents, not use unclearly contract: 19 + Goods : Specify the characteristics of goods, product specifications, origin, quality and quantity + Delivery time: specify the delivery time The last delivery date should be specified Penalty clause if the delivery is slow + Payment method: regulate clearly payment method Buyers should stipulate: how much to pay when receive the documents , how much to pay when receive the goods The currency of payment should be specified + Place of dispute settlement: try to reach agreement if there is a dispute to be settled in the importing country + Cargo insurance: the type of insurance must be specified - Bill of lading by the shipping company When loading the goods must have the supervision of the representative of the importer to timely compare the accuracy of the bill and schedule ship - The quality certificate issued by the competent authority of the exporting country or the representative of the importer - Requirement of Certificate of Inspection - Requirement to issue payment instruments of banks such as L/C 3, Solutions to limit the risk to the exporter : For importers the biggest risk is that customers not pay or pay late when the goods are delivered to the importer In addition to these measures, exporters should : _ Choose safe payment method for exporters: Telegraphic transfer money in case of payment before maturity, L/C in case of payment upon receipt of goods Should ask the importer how much advance payment before delivery, how many money when the buyer received the documents _ The contract should specify the payment period and penalties for late payment Exporters should also specify where the dispute is resolved in the exporting country _ Fees other, such as: Loading/unloading fee, L/C amendment fee, should also added in the contract to avoid disputes or delay payments _ The exporter should clearly state the inconceivable circumstances in the contract that the exporter may be exempted from liability if encountered In the process produce , prepare , transport goods for the importer, can be met the problem: Natural disasters, epidemics, war, strike,… So delivery is slower than expected or quality does not guarantee 100% with importers requirements 20 _ To avoid the case where the importer refuses to pay due to lack though the quantity is not few (because of objective reasons such as loss during transportation, weighing, ) The exporter should regulate the error what can accept in contract and original document 21 ... credit institutions and the construction of early warning system - Enhance the role of the national credit information center D Limits on international payment In the international trading, the payment. .. payment operations : + Are the economic risks arising in the process of making international payments It is due to issues arising from parties involved in international ypayment operations (exporters,... documents And if out of that date, the issuing bank lose the right to refuse and the bank must bear all risks To the notifying bank: the notifying banks must define the encoding of issuing bank,