Detailed explanation of the presentation of documents and foreign exchange settlement methods in foreign trade transactions

In international trade, delivery of documents is one of the most important links. This article will introduce in detail several common presentation methods and their operating procedures to help readers better understand the process of presentation and settlement of foreign exchange in foreign trade transactions.

1. Document against payment (D/P)

Document against Payment, or D/P (Document against Payment), refers to the exporter collecting payment from the customer through the bank. Specifically, when the goods arrive at the destination, the bank will notify the buyer to pay. Only when payment is confirmed, the bank will hand over the complete set of documents to the customer. This method is more beneficial to exporters, because even if the buyer does not pay, the bank will not deliver the documents, thereby avoiding the risk of “lost money and goods”. However, D/P also carries certain risks: if the market changes, the buyer may demand a price reduction or refuse to pay, causing the exporter to face the cost and trouble of returning the goods.

2. Letter of Credit (L/C)

In order to solve the problems caused by D/P, letters of credit (L/C) were introduced in international trade. In this model, the bank acts as a credit guarantor, guaranteeing that as long as the exporter submits documents that meet the requirements on time, the importer must pay. This not only protects the interests of exporters, but also gives buyers peace of mind.

3. Delivery method

1. Presentation of documents under letter of credit

If the letter of credit stipulates a specific period for presentation of documents, the beneficiary must submit relevant documents within this period; if there is no clear stipulation, the bank will not accept documents submitted more than 21 days from the date of shipment, but no later than Later than the validity period of the letter of credit. The advantage of submitting orders in advance is that problems can be discovered and remedied in time.

2. Presentation of documents under the collection payment method

Under the condition of collection payment, the exporter usually submits documents to the local bank for collection after shipping the goods. At this time, the exporter needs to provide detailed collection instructions to the bank and ensure that the documents submitted are consistent with the instructions.

3. Presentation of documents under T/T payment method

According to different payment time, T/T can be divided into two types: front T/T and rear T/T. The former includes “T/T before shipment” and “T/T after shipment with fax of bill of lading”, while the latter will send all documents to the importer after shipment is completed.

4. Document presentation and foreign exchange settlement in cross-border e-commerce

1. Presentation of documents

For cross-border e-commerce, presentation of documents means that the seller submits all required documents to the bank within the agreed time in order to complete the subsequent settlement procedures. There are two common ways of delivering documents: one-time delivery and two-time delivery (pre-trial delivery).

2. Foreign exchange settlement

Foreign exchange settlement refers to the process in which the bank converts foreign exchange into the currency of the seller’s country in accordance with the terms of the letter of credit after verifying that the documents are correct. The main methods of foreign exchange settlement include export bills, receipt settlement and regular foreign exchange settlement.