After the goods are shipped, the seller should bring all the prepared documents to the bank for settlement and handle the procedures of exchange verification and tax refund. At this point, the performance of an export business contract is basically completed.
1. Document delivery
Document delivery means that the seller submits the full set of documents specified in the letter of credit to the bank within the specified time. After the bank reviews the documents, it will handle the settlement according to the payment method specified in the terms of the letter of credit. Generally, the transaction is handled within the document delivery period and validity period specified in the letter of credit.
There are two ways to deliver documents.
(1) One-time delivery, that is, after the goods have been shipped and the full set of documents have been collected, the enterprise submits them to the bank at one time.
(2) Two-time delivery, also known as pre-examination delivery, that is, before the transport documents are issued, the enterprise first submits other prepared documents to the bank for pre-examination. If any problems are found, they will be corrected in time. After the goods are shipped and the transport documents are received, they can be negotiated and sent to the outside on the same day.
2. Foreign exchange settlement
Foreign exchange settlement means that after the bank has verified the export documents and found them to be correct, it will transfer the foreign exchange to the seller in accordance with the payment terms stipulated in the letter of credit. The main ways of foreign exchange settlement are as follows.
(1) Export documentary proof.
Export documentary proof means that after the supply contract is signed, the seller issues a bill of exchange to be paid by the buyer based on the letter of credit issued by the buyer’s bank, and then submits it to its agent bank for discount together with relevant documents (mainly bills of lading, insurance policies and invoices for goods sold, etc.).
(2) Foreign exchange settlement after receipt.
After receiving the documents, the bank does not make a documentary proof, but directly sends the documents to the issuing bank. After the issuing bank transfers the payment, it will settle the payment with the seller.
(3) Periodic foreign exchange settlement.
After receiving the documents, the bank will settle the payment with the seller within a certain period of time. This period is the estimated time for claiming the payment.