Methods of international payment 1, Cash in advance 2, Letter of credit 3, Document collection4, Open account

MethodUsual Time of Payment

Goods Available To Buyer

Riskto Seller

Risk to Buyer Comments

CASH IN ADVANCE

Before shipment

After payment

None

Complete. Relies on seller to ship exactly the goods expected, as quoted and ordered

Seller's goods must be special in one way or another, or special circumstances prevail over normal trade practices (e.g., goods manufactured to buyer-only specification).

LETTER OF CREDIT (L/C)

(See next two items.)

   

Commerical Invoice must match the L/C exactly. Dates must be carefully headed. "Stale" documents are unacceptable for collection.

 

Letters of Credit require total accuracy in conforming to terms, conditions, and documentaion. Consult your United Shipping Associate member for determining feasibility of terms and conditions.

CONFIRED IRREVOCABLE CREDIT

After shipment is made, documents presented to the bank.

After payment

Gives the seller a double assurance of payments. Depends on the terms of the letter of credit.

Assures shipment is made but relies on exporter to ship goods as described in documents. Terms may be negotiated prior to L/C agreement, alleviating buyer's degree of risk.

The inclusion of a second assurance of payment (usually a U.S. Bank) prevents surprises, and adds assurance that issuing bank has been deemed acceptable by confirming bank. Adds cost and an additional requirement to seller.

UNCONFIRMED IRREVOCABLE CREDIT

Same as above

Same as above

Seller has single bank assurance of payment and seller remains dependent on foreign bank. Seller should

Same as above Credit can be changed only by mutual agreement, as stipulated in a sales agreement. Becomes open account with buyer's

contact his banker to determine whether the issuing bank has sufficient assests to cover the amount.

bank as collection agent. Foreign bank may have problems making payment in sum or timeliness.

DRAFTS

(See next two items.)

Remittance time from buyer's bank to seller's bank may still take one week to one month.

 

Drafts, by design, should contain terms and conditions mutually agreed upon.

 

A draft may be written with virtually any term or condition agreeable to both parties. When determining draft tenor (terms and conditions), consult with your banker and freight forwarder to determine the most desirable means of doing business in a given country.

SIGHT DRAFT (with documents against acceptance)

On presentation of draft to buyer.

After payment to buyer's bank.

If draft not honored, goods must be returned or resold. Storage, handling, and return freight expenses may be incurred.

Assures shipment but not content, unless inspection or check-in is allowed before payment.

A draft can be a collection instrument used to exchange possession and title to goods for payment. Seller is essentially drawing a check against the bank account of the buyer. Buyer's bank must have pre-approval, or seek approval of the buyer prior to honoring the check. Payble upon presentation of documents.

TIME DRAFTS (with documents against acceptance)

On maturity of the draft

Before payment, after acceptance

Relies on buyer to honor draft upon presentation.

Assures shipment but not content. Time of maturity allows for adjustments, if agreed to by seller.

Payable based upon the acceptance of an obligation to pay the seller at a specified time. Although a time draft has more collection leverage than an invoice, it remains only a promissory note, with conditions.

OPEN ACCOUNTAs agreed, usually by invoice

Before payment

Relies completely on buyer to pay account as agreed

None

All terms of payment, including extra charges and terms should be mutually understood and agreed upon prior to open account initiation. Companies conducting ongoing business are candidates for open account terms of payment. Seller must measure not only buyer's credit reliability but the country's as well.

STT Giao dịch Mức phí Tối

thiểu Tối đa

I  THƯ TÍN DỤNG XUẤT KHẨU

1Thông báo thư tín dụng

12USD    

 2

 Thông báo thư tín dụng do ngân hàng trong nước chuyển đến

 5USD    

3 Thông báo tu chỉnh thư tín dụng

10USD    

4

Thông báo tu chỉnh thư tín dụng do ngân hàng trong nước chuyển đến

5USD    

5Chuyển tiếp thư tín dụng đến Ngân hàng khác

20USD    

6

Chuyển tiếp tu chỉnh thư tin dụng đến Ngân hàng khác

15USD    

7 Kiểm tra, xử lý bộ chứng từ

10USD    

8Thay thế/bổ sung chứng từ sau lần gửi đầu tiên

5USD    

9 Thanh toán bộ chứng từ

0.15% 20USD 150USD

10 Thanh toán L/C 0.10% 20USD 120USD

chuyển nhượng

11 Chuyển nhượng thư tín dụng      

  - Không thay thế chứng từ

30USD    

  - Thay thế chứng từ 0.10% 20USD 150USD

12 Tu chỉnh chuyển nhượng      

  - Tăng số tiềnNhư phát hành L/C  tính trên

số tiền    

  - Tu chỉnh khác 30USD    

13

Xác nhận thư tín dụng của Ngân hàng đại lý phát hành

2%/năm 100USD  

14 Chiết khấu chứng từ XK

Lãi suất theo thỏa thuận    

15 Phí gửi chứng từ Theo phí thực tế phát sinh    

II  THƯ TÍN DỤNG NHẬP KHẨU

1Phát hành thư tín dụng

     

1.1 Phần ký quỹ 100% 0.075% 20USD 500USD

1.2 Phần ký quỹ dưới 100%      

  - Trị giá L/C dưới 1,000,000 USD

0.15% 20USD 500USD

 

- Trị giá L/C từ 1,000,000.00 USD trở lên(L/C tuần hoàn thu phí trên cơ sở tổng trị giá)

0.1%   4,000USD

2 Phí trả chậm      

2.1 Phần ký quỹ 100% 0.075% 20USD 1000 USD

2.2Phần ký quỹ dưới 100%  hoặc Miễn ký quỹ

     

  Dưới 1 năm 0.05%/tháng 30USD  

  Trên 1 năm 0.1%/tháng 50USD  

 (Thời gian trả chậm tính từ ngày chấp nhận thanh toán đến ngày thanh toán, tính tròn tháng)

3 Tu chỉnh L/C      

  - Tu chỉnh tăng số Như phát hành 5USD 500USD

tiền

  - Tu chỉnh khác 10USD    

  (Nếu tu chỉnh cả số tiền và điều khoản khác thì tùy mức độ phức tạp có thể thu cả hai loại phí)

4 Phát hành L/C sơ bộ (draft)

10USD    

5 Ký hậu vận đơn/lập UQNH

5USD    

  Lập bảo lãnh nhận hàng

50USD    

6 Thanh toán thư tín dụng

0.20% 20USD 500USD

7 Huỷ thư tín dụng10USD + chi phí phát

sinh thực tế   

8 Phí thu của người hưởng      

  - Điện phí 10USD    

  - Phí sửa đổi 30USD    

  - Phí sai biệt 50USD    

  - Phí do thiếu bộ chứng từ copy

20USD    

 (Tùy trị giá L/C, bộ chứng từ mà TTQT có thể quy định mức phí cao hơn)

III  BẢO LÃNH NGOÀI NƯỚC

 1

 Phát hành Thư bảo lãnh hoặc Stanby L/c (%/tháng, phí tính trọn tháng)

 = Phí phát hành bảo lãnh trong nước của loại hình tương ứng + 0,01%/tháng

   

2Tu chỉnh Thư bảo lãnh hoặc Stanby L/C

     

  - Tu chỉnh tăng số tiền

Như phát hành thư bảo lãnh    

  - Tu chỉnh khác 10USD    

  - Tu chỉnh do người hưởng chịu

30USD    

3 Bảo lãnh thanh toán hối phiếu trả chậm

Như phát hành thư bảo lãnh    

4 Huỷ thư bảo lãnh 15USD    

5Thông báo thư bảo lãnh của ngân hàng khác

12USD    

6Thông báo tu chỉnh thư bảo lãnh của NH khác

10USD    

7

Xác nhận thư bảo lãnh(%/tháng, phí tính trọn tháng)

= Phí xác nhận bảo lãnh trong nước + 0,01%/tháng

100USD  

IV  NHỜ THU NHẬP KHẨU

1 Phí thông báo nhờ thu      

  - Séc 2USD/tờ    

  - Bộ chứng từ 5USD/bộ    

 2 Phí xử lý nhờ thu (trừ trên số tiền thanh toán)

     

   - Séc 5USD/tờ     

   - Bộ chứng từ 0.05%    100USD 

3 Thanh toán nhờ thu      

  - Séc 0.15% 5USD 300USD

  - Bộ chứng từ 0.15% 10USD 300USD

4 Từ chối thanh toán nhờ thu nhập

10USD + phí thực tế phát sinh    

V NHỜ THU XUẤT KHẨU

1 Xử lý chứng từ nhờ thu

5USD    

2 Phí gửi bộ chứng từ Theo thực tế phát sinh    

3 Thanh toán nhờ thu xuất

0.15% 10USD 150USD

4 Sửa đổi chỉ thị nhờ thu

10USD    

5Thay thế/bổ sung chứng từ sau lần gửi đầu tiên

5USD    

6Huỷ nhờ thu theo yêu cầu của người nhờ thu

10USD + phí phát sinh (nếu có)    

VI

THANH TOÁN KHI NHẬN CHỨNG TỪ (CAD)

     

1 CAD xuất khẩu      

  - Nhận chứng từ gửi đi

5USD    

  - Thanh toán CAD 0.15% 10USD 150USD

2 CAD nhập khẩu      

  - Phí bảo lãnh theo CAD

0.25%/quý 30USD  

  - Thanh toán CAD 0.15%/quý 10USD 150USD

VII  CHUYỂN TIỀN

1   Chuyển tiền ra nước ngoài

     

  - Thanh toán chuyển tiền

0.2%  5USD  400USD 

  - Tu chỉnh/huỷ lệnh chuyển tiền, tra soát

10USD    

 

- Cấp giấy xác nhận mang theo ngoại tệ ra nước ngoài

10USD    

2 Chuyển tiền đến      

  - Thu người thụ hưởng trong nước

0.05% 5USD 100USD

  - Thoái hối lệnh chuyển tiền

10USD    

 - Phí thu theo yêu cầu NH chuyển tiền đến

Thu theo biểu phí áp dụng cho các NH đại lý    

VIII  ĐIỆN PHÍ      

  SWIFT      

 - Phát hành LC/thư bảo lãnh/chuyển       nhượng LC

20USD    

  - Điện khác 5USD    

  Mạng truyền thông khác

Thu theo thực tế phát sinh.Tối thiểu thu như phí của

mạng SWIFT   

International Payment> Export

EXPORT PAYMENT Mode of Payment Payment by L/C: the popular method of payment in international payment. 

This is the main product of Vietcombank. In fact, L/C is the agreement between Vietcombank and importer's bank, to ensure that the exporter will obtain payment when the beneficiary honor its obligation to deliver goods and present the Bank with set of documents in accordance with L/C tems and conditions. This method of payment is often used in case the importers do not believe in the exporters and vise versa. In order to support exporters, Vietcombank can act as: advising bank or paying bank, confirming bank or negotiating bank. You can totally believe in services provided by Vietcombank thanks to its fast, exact, safe and automatic information processing system with flexible charges and skilful staff. Moreover, we can advise you with the most favourable and appropriate payment terms in conformity with current international practice. Through transactions with Vietcombank, exporters can create reputation with their partners by Vietcombank's effective support (see Guidelines)Apart from method of payment by L/C, Vietcombank also offer other methods of payment, including: -         D/A Collection (Document against Acceptance)-         D/P Collection (Document against Payment)-         D/OT Collection (Document against other terms)-         Inward remittance (see remittance) 

Guidelines for export payment by L/C Importer's bank will issue an L/C upon importer's application and the procedure for export payment by L/C is as follow: 

I. To receive L/C When receiving L/C or L/C amendment from issuing bank, Vietcombank will advise to you. The bank then deliver the L/C to you either at our office, by mail or directly hand over if you have large business volume with Vietcombank or at your request. 

II. To examine the content of L/C  We sincerely advise you to thoroughly examine the content of L/C or L/C amendment upon receipt against each article of the contract to ensure the conformity.If you find that you could not implement all terms and conditions of the L/C, you should immediately notify importers and require to amend the L/C through opening bank (stipulation to amend L/C to be done through opening bank is very important). A regretful practice is that when the beneficiary finds that they can not implement in accordance with terms and conditions of the L/C but they do not require the importer to amend and still deliver goods and present the set of documents with errors. As a result, the exporter could not ask for payment from the issuing bank and have to wait for the goodwill of importers to accept discrepancies and agree to pay. This has distorted its nature of “irrevocable” and consequently, the beneficiary shall bear a so-called cost of “document error fee”. Eventhough, upon pretex of this, in some cases the importers do not want to receive goods for their own reason (e.g the price of goods at the time of receipt is lower than that agreed in L/C…), they shall refuse to receive goods and dishonor their obligation to pay. As a result, a big lost shall be suffered by the exporter (freight, idle capital, no market for re-sale…)

 III. To deliver goods and to issue shipping documents

 If you have accepted the received L/C, you have to prepare goods and deliver goods in time as agreed and obtain all the documents required in L/C. You should carefully examine shipping documents before the presentation at Vietcombank.  

IV. Documents Presentation at Vietcombank You should present documents at Vietcombank prior to the expiry date stipulated in L/C (in case the presentation date is not specified in the L/C, it is deemed that documents must be presented within 21 days since the date of loading). However, you should present documents some days before the expiry date so that the bank have time to examine documents. Moreover, if discrepancies are found out, you will have time to amend, add documents to conform to the L/C. When presenting documents, you should present documents together with original L/C, related amendments of L/C, (if any) and letter of advising L/C, amending L/C, with tested telex or authorised signature and payment requirement (in printed form). For export L/C under the loan repayment program of the Government, you should send to Vietcombank the following documents: - The order signed with the Ministry of Finance of Vietnam- Guarantee of the Ministry of Finance (if any)  

V.  L/C Payment When documents are presented in conformity with terms and conditions of L/C, based on requirement of customers under "payment requirement", Vietcombank  will make payment based on one of the following conditions:- Either after receiving payment from foreign banks- or make payment to customers immediately with a certain amount under  the form of document discounting. VI.  Document discounting There are two forms of discounting 1. Discounting without recourse: (the bank make outright purchase of documents and bear the risk if foreign banks refuse payment) Requirements for Vietcombank to implement discounting without recourse 1.1 L/C at sight and telex payment is allowed 1.2 L/C stipulates: Bill of lading is made by the order of issuing bank and all original B/L are presented to Vietcombank 1.3 Documents totally conform to terms and conditions of L/C 1.4 Issuing bank is the reputable bank in international market and have regular transaction with Vietcombank, always make payment in due time. 

1.5 Traditional markets1.6 Other information related to the goods and price in the market of export goods at the time of discounting. 1.7 Payment requirement for discounting without recourse must be signed by both account holder and Chief accountant (if Chief Accountant is registered) 2. Discounting with recourse (the discounting bank is entitled to recourse money from customers if foreign banks refuse payment).  Requirements 2.1 Issuing bank is the reputable bank 2.2 Traditional market 2.3 Reputable customers have good payment relationship with Vietcombank, maintain account and have regular transactions with Vietcombank.  2.4 Customers commit to pay Vietcombank the amount that Vietcombank has discounted in case paying bank refuse payment. 2.5 Letter of discounting requirement must be signed by both account holder and Chief Accountant (if the Chief Accountant is registered) 2.6 Vietcombank will discount documents when it receives the payment acceptance by telex and/or the draft has been endorsed to be paid at the maturity date by paying bank/confirming bank for time export documents of 60 to 360 days. 2.7 Discounting interest rate is often lower than or equal to foreign exchange lending interest rate in the same period. 2.8 Discount rate is often less than 100% the invoice value. 

VII.  Notes for using L/C payment for sellers/exporters 1.    Before signing contract, exporters must be fully aware of the competence and business situation of importers.  2.    Exporters should confirm the reputation of importers if L/C does not require confirmation 3.    For confirmed L/C, customers should work with Vietcombank to review the goodwill of importer’s bank to confirm L/C. 4.    Exporters should take careful consideration of the L/C to ensure that terms and conditions of the L/C can be implemented and request importers to amend L/C if they find that it is difficult to realize L/C . 5.    To issue documents specified in the L/C in conformity with L/C requirements accurately. 6.    You should pay attention to foreign exchange control of importers’ country because this can affect the payment 

Fee schedule, interest rate -         Fee schedule (Part VII, VIII), Vietcombank fee schedule-         Interest rate (the current interest rate table of Vietcombank)MODE OF PAYMENT-         By Letter of Credit (L/C):A very common mode of payment. Vietcombank, on behalf of the Importer, commits with the Exporter’s/Supplier’s bank to make payment within the specified time when the Exporter/Supplier presents documents as indicated in L/C that Vietcombank opened upon the Importer’s request (Application for opening L/C is provided.)This mode of payment assures the Importer that Vietcombank will, on behalf of the Importer, make payment to the Exporter/Supplier only when the Exporter/Supplier performs his responsibilities stipulated in the L/C.By this mode, the Importer has the access and is adaptable to international settlement standards (at the time being: UCP 500-the United Customs and Practices for Documentary Credit – issued by the International Chamber of Commerce - ICC).By opening L/C at Vietcombank, customers could receive Vietcombank’s advise about the best terms of payment, currency of payment… in accordance with international practices.In this mode, Vietcombank in essence guarantees the payment of the Importer. Therefore, Vietcombank will implement several requirements of the Importer’s assurance: cash cover, lending… Based on the customers’ payment capability and their reputation, Vietcombank might apply various levels of cover announced by Directors of Vietcombank branches within a specific period.Over the past years, the strict compliance with international settlement standards has built up the confidence for Vietcombank by exporter’s banks and impoters opening L/C at Vietcombank (for more details, see the below Guidelines).Apart from method of payment by L/C, Vietcombank also offer other methods of payment, including: -         Documents against Acceptance - D/A (Collection by acceptance of payment when documents are presented)-         Documents against Payment – D/P (Collection by payment when documents are presented)-         Documents against – D/OT (Collection by delivery of documents under other conditions)-         Money transfers (see Remittance)Guidelines on payment by import L/C:In order to provide customers with fundamental knowledge, Vietcombank introduces a common mode of payment by L/C at the time being: Irrevocable L/C

Request for opening L/C

Funds for assurance of L/C payment:Supposing that in the Contract, parties agreed to pay by L/C, you need to consider the funds for payment of L/C which you request banks to open:1.1           L/C issued by equity, you get full (100%) cash cover1.2           L/C issued by equity, in case you do not get full cover and/or want to exempt or decrease the cover, please contact Credit Departments for consideration, or Vietcombank will provide levels of cover by period.1.3           L/C issued by lending from Vietcombank, please contact Credit Departments for consideration.Application for L/C opening:After the consideration of funds, you apply for opening L/C based on the contents of the Contract. For your convenience, Vietcombank has printed application form in accordance with ICC’s and SWIFT organisation’s standards. You should read carefully

and complete in the appropriate items, boxes and delete unnecessary and unsuitable points.Since banks open L/C upon the Buyer’s request, you should carefully check the content of the Contract to assure the unification when completing L/C (as the confliction means the Contract breach of the Buyer).After completing the application, you need to present the following documents at Vietcombank:2.1 Letter requesting to issue L/C (printed form);2.2 One (01) copy of the Trade Contract or papers of the same value (if available);2.3 One (01) copy of Certificate registering code number for export-import enterprises (for customers of first transaction);2.4 Documents allowing imports of the Trade Ministry or Ministry in charge (for conditional imports)After considering your funds for assurance of L/C payment, Vietcombank will decide the issuance of L/C.*Separately for import L/C by lending from the Government and ODA, apart from the above-mentioned regulations, you need to send Vietcombank such documents as: Ministry of Finance’s approval on the usage of the Government and ODA’s lending; Approval of Contract of the financing organisation.II- Checking L/C contents:After Vietcombank issues L/C, you will receive one (01) copy of that L/C. You should reconcile L/C contents and their application to assure that the L/C completely complies with the Contract and your requirements, and at the same time, advise differences to Vietcombank.III- Amendments of L/C:If you need to amend L/C, please present the Letter for L/C amendment (printed form) attached to a written consent between the Buyer and the Seller (if any).IV- Receiving and checking documents:You will receive the delivery documents under L/C at Vietcombank’s office. You need to reconcile L/C contents and those documents. In case of differences, within three (03) working days, you must advise Vietcombank immediately to complain foreign banks.Vietcombank will give documents after you accept to pay those documents and relating charges (if any).V- Requirement of Guarantee issuance/Authorise the receipt of goods under L/C:Vietcombank will issue guarantee for receipt of goods when the original Bill of Lading is not available or issue the authorised letter for receipt of goods or endorse the Bill of Lading for you to receive goods under L/C.Conditions for Vietcombank’s issuance of Letter of Guarantee – Authorised Letter for receipt of goods, Endorsement of Bill of Lading:You have to deposit 100% of invoice value, or authorise Vietcombank to set aside the respective amount on the deposit account or debit the borrowing account upon payment, and present following documents:1.        Issuance of Guaranteed Letter for Receipt of Goods: you must have the Letter for Guarantee Issuance (printed form) together with one (01) copy of Bill of Lading, or Airways Bill, and one (01) copy of invoice sent directly by the Exporter.2.        Issuance of Authorised Letter for Receipt of Goods: you must have the Letter for Authorise Issuance (printed form) together with one (01) original of Airways Bill mentioning that the receiver is Vietcombank, and one (01) copy of invoice.3.        Endorsement of Bill of Lading: you must have the Letter for Endorsement of Bill of Lading (printed form) together with one (01) original of Bill of Lading and one (01) copy of invoice.VI- L/C payment:

VCB will extract money from your specified account to make payment to foreign bank as stipulated in L/C upon receipt of set of documents completely complied with terms and conditions of L/C.VII- L/C cancellation:If you request to cancel L/C, please note that Vietcombank will not accept the cancellation in case that:1.           You have received goods through Vietcombank’s Guarantee for Receipt of Goods.2.           There are trade disputes. The two Parties (seller/buyer) agreed but did not receive the acceptance of L/C cancellation of relating banks.VIII- Noteworthy points when selecting payment by L/C for the Importer/L/C Opener:1.     Before opening L/C, the Buyer should negotiate with the Seller in terms of amounts to be paid, delivery schedule, mode of delivery, and documents to be presented.2.     The Buyer must acknowledge that L/C is not an absolutely safe mode of payment as transactions between banks are based on only documents, not on goods. If documents comply with terms and conditions of L/C, the Buyer must pay in spite of differences between delivered goods and goods described in the Contract.3.     The Buyer needs to assure that L/C is in accordance with the Contract.4.     L/C terms and conditions should be succinct, easy to understand; too detailed contents and complicated specifications should not be included in L/C.5.     The Importer should not ask those documents that the Seller could not provide.6.     In case there is something of suspicion during the transaction, you should contact Vietcombank immediately for co-solution.7.     The Buyer needs to consider the exchange rate fluctuations to avoid risks.

Fees

Vietcombank’s fee is different from the fee of several other banks in that it has the maximum level. It means customers only have to pay up to a certain amount of fee. For customers having frequent transactions, Vietcombank could, depending on kinds of services, consider the decrease or even exemption of fee. (Section VII, VIII)

Financial and Legal Costs/Bank Charges From Wikiversity< Financial and Legal CostsJump to: navigation, search

Unit 4.8-Financial and Legal Costs 

Introduction | Bank Charges | Insurance Premiums | Export Credit Insurance | Legal Fees | Summary | Resources | Activities | Assessment

Go to Unit 4.1 | Unit 4.2 | Unit 4.3 | Unit 4.4 | Unit 4.5 | Unit 4.6 | Unit 4.7 | Unit 4.8 | Unit 4.9

Return to Trade Finance Module 4: Payment Methods

CONTENTS [hide] 

1 Bank Charges o 1.1 Loan Fees o 1.2 Banker’s Acceptances Fees o 1.3 Letters of Credit Fees o 1.4 Documentary Collection Fees o 1.5 Electronic Funds Transfers Fees

o 1.6 Foreign Exchange Fees

BANK CHARGES[EDIT]

Loan Fees[edit]

Banks will charge customers fees and interest based on creditworthiness and length of time of the loan. There is no set formula since banks will often require assets as collateral to cover the amount of the loan. With some customers, they require “compensating balances,” meaning that the company needs to keep a minimum balance; therefore, an indirect cost to the customer exists since the funds cannot be used.

Banker’s Acceptances Fees[edit]

A banker’s acceptance is a negotiable instrument which may be used to obtain immediate funds by discount selling to the drawee bank or an investor. The instrument's marketability is limited only by the reputation of the accepting bank and market demand. The net proceeds of the sale are obtained by deducting the following two items from the face amount of the acceptance: (1) the discount rate (Interest Rate x Days to Maturity x Face Amount) and (2) the bank's acceptance commission. The combination of these is referred to as the "all-in" rate.

For example:Discount Rate (rate earned by investor) -- 5.13 % p.a.Bank Commission -- 1.50 % p.a.All-in Rate -- 6.63 % p.a.

Letters of Credit Fees[edit]

Depending on what has been negotiated, bank charges may be placed against (for the account of) a buyer/applicant or may be shared between a buyer/applicant and a seller/beneficiary. Rarely will all charges be for the account of a seller/beneficiary. If the charges are to be shared, the customary procedure is that each party will pay the applicable fees for his respective country and/or bank.

On average the charges could be 1% of the face amount of the letter of credit. These rates are negotiable and may be reduced if a significant amount of letter of credit business is

done with a particular bank. In addition to the normal and customary fees, additional fees could be charged for

issuance pre-advice advice amendments extension confirmation documentary examination payment negotiation acceptance reimbursement collection without examination transfer assignment of proceeds SWIFT handling courier discrepancy cancellation discounting

The important step is to identify these costs before the methods of payment are finalized since both parties may feel the costs outweigh the risks and will then choose a less costly method of payment.

Documentary Collection Fees[edit]

To avoid the higher costs associated with letters of credit, many international businesses are utilizing the documentary collection services of banks. Similar to a letter of credit only in that documents/drafts are passed through the banking system and cannot normally be retrieved by the buyer without payment, there is no bank guarantee or elimination of risk. Because the banks are not absorbing any form of risk, the fees for this type of transaction are much lower than a letter of credit and make this method of payment worthy for consideration when transaction values are below US$10,000 or when the transaction is between parties that have begun to develop a relationship. Fees include

cost of transmitting funds cost of issuing banker’s draft cost of receipt of transfers cost of issuing banker’s draft cost of clearing foreign checks cost of clearing checks in foreign currency

Electronic Funds Transfers Fees[edit]

Electronic funds transfers (also commonly known as wire transfers) are a quick and effective method of transferring larger sums of money between buyers and sellers, particularly when the buyer and seller are located in different countries. Banks rates vary, usually as a percentage of the transaction, and can be 1% to 3% of the transaction or a flat fee agreed upon with the customer.

Foreign Exchange Fees[edit]

Since this discussion is focused on international transactions, it is unlikely that every party involved in the transaction will avoid an exchange of currency. Such will happen only if foreign currency accounts are held by the buyer and seller or the companies are related. In a situation where the companies are not related and are located in countries that have different currencies and the banks do not offer foreign currency accounts, a currency exchange will take place. As expected, banks charge fees for the exchange service as well as for the opportunity of reducing foreign currency fluctuation-related losses by offering forward and option currency contracts.

The fees for these services will depend on the volume of currency being exchanged as well as the currencies involved in the transactions.

 

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International trade services Business /

Interest Rates, Fees & Charges /

International trade services

A guide to Fees and ChargesEffective 19 March 2012

Contents

Fees applicable to all products

Imports

Documentary Collections - Inward D/P (Sight) or D/A (Term)

Letter of Credit Outward (Establishment) - Import/local/stand-by

Letter of Credit Outward (Drawing) - Import/local/stand-by

Exports

Documentary Collections – Outward D/P (Sight) or D/A (Term)

Letters of Credit Inward – Export/local/stand-by

International payments

Inward Payments (remittances received)

Outward Payments (remittances sent)

General Charges and Other Trade Services

Trade Finance – International or Domestic

Foreign Currency Accounts

Forward Exchange Contracts

Product disclosure statement

To the extent that this document contains information on fees and charges relating to the following NAB products:

NAB Foreign Currency Account - Onshore

National Online Corporate

This document forms part of the Product Disclosure Statement (PDS) for each of these products, along with:

the document titled ‘Product Disclosure Statement including Terms and Conditions’ for the relevant

product; and

for NAB Foreign Currency Account, the document titled ‘Indicator Rates - For Foreign Currency

Account’; and

for National Online Corporate, the document titled ‘National Online Corporate - Pricing’

These documents together make up the PDS for the relevant product. If you have not already received copies of each of these documents for your product, please let NAB know.

Any advice in this document has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice in this document, NAB recommends that you consider whether it is appropriate for your circumstances.

NAB recommends you consider the Product Disclosure Statement or other disclosure documents, available from NAB, before making any decisions regarding any of the products listed above. These products are issued by NAB.

Introduction

NAB prides itself on providing efficient, quality service. As part of these high standards, we aim to provide transparency in our charging. In other words, we like our business customers to know exactly what services are available to them and how much they should expect to pay for them.

This brochure covers the range of international business services available from NAB and the fees which may apply.

Fees listed in this brochure are current as at 19 March 2012 and may change at any time. To ensure you have the most up to date fees or if you would like any further information on fees and charges for international trade services, talk to your Business Banking Manager, or call 13 10 12, Monday to Friday, 8am to 8pm EST.

Definition of Banking Day

‘Banking Day’ is a day other than a Saturday or Sunday, or a day gazetted as a public holiday in every state and territory of Australia.

Other definitions

D/A = Documents against Acceptance

D/P = Documents against Payment

Fees applicable to all products

Additional handling fee, charged when additional

handling is undertaken on trade transactions at the

customer’s request, such as pre-examination of Export

Credit documents

$50

General enquiries or investigations, at a customer request,

that require SWIFT messaging

$25

Some transactions incur government taxes and charges and/or fees and charges imposed by overseas banks. These taxes, fees and charges are not set out in this brochure, and may change at any time. Where they apply, they will be passed on to you.

Goods and Services Tax (GST)

The GST clause applies to fees and charges that are not expressed as ‘GST inclusive’ in this brochure. However, in the event of a change to the GST rate, NAB reserves the right to apply the GST clause to all fees in this brochure.

GST Clause

If NAB is liable to pay goods and services or any similar tax (GST) on a supply made in connection with a service referred to in this brochure, then the Customer agrees to pay NAB (on demand) an additional amount equal to the consideration payable for the supply, multiplied by the prevailing GST rate.

Definition of GST

‘GST’ a goods and services tax or any similar tax imposed in Australia.

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Imports

Documentary Collections -Inward D/P (Sight) or D/A (Term)

Documents received for collection 0.25% of collection amount (minimum $90) (maximum

$850) plus handling and communication charges of $25

Other Services

(inclusive of handling and communication charges):

Airway Bill Release – Goods consigned to NAB

$90 per service

Refusal to accept/pay against documents as presented

Extension of term bills on instructions of remitting party

Where documents are received with instructions to be

released free of payment and item is finalised in NAB’s

records

Previously accepted bills received for collection and

payment

Endorsement or Avalisation Fee

Release of documents against Trust Receipt and NAB

accepts responsibility for eventual payment

1.5% p.a. of Bill of Exchange amount or Trust Receipt

amount (minimum $90) from the date of Endorsement/

Avalisation/ Trust Receipt to date of payment

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Letters of Credit Outward (Establishment) - Import/local/stand-by

Issued/Established $120 plus handling and communication charges of $15

Issued/Established using National Online Corporate $75 plus handling and communication charges of $15

Issued fully cash backed $90

Other Services

(inclusive of handling and communication charges):

Stand-by Letter of Credit Fee available on application

Amendment $90

Amendment using National Online Corporate $45

Where any undrawn balance remaining at expiry is

greater than the equivalent of AUD 5000

0.25% of amount remaining (minimum $90)

Cancellation of or any Decrease in credit amount 0.25% of the cancellation/ decrease amount (minimum

$90) plus amendment fee

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Letter of Credit Outward (Drawing) - Import/local/stand-by

Drawings - Documents received 0.375% of drawing amount (minimum $100) plus

handling and communication charges of $25

Drawing - Documents received where Letter of Credit

was established using National Online Corporate

0.325% of drawing amount (minimum $100) plus

handling and communication charges of $25

Other Services

(inclusive of handling and communication charges):

Refusal to accept/pay against documents as presented $90

Note: The following Fees and Charges are normally charged to your Supplier but may be payable by you where

you have agreed to this with your supplier.

Acceptance of term drafts and/or incurring a Deferred

Payment Undertaking

1.5% p.a. (minimum $90)

Handling of Discrepancies USD90 or equivalent in other currency

Reimbursement bank commission USD90 or equivalent in other currency

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Exports

Documentary Collections - Outward D/P (Sight) or D/A (Term)

Despatched for collection 0.25% of collection amount (minimum $90) (maximum

$850) plus handling and communication charges of $25

(GST inclusive)

Purchased for collection 0.25% of collection amount (minimum $90) (maximum

$850) plus $50 Trade Finance Fee plus handling and

communication charges of $25

Direct Collections (using National Online Corporate) $60 (GST inclusive)

Direct Collections Purchased (using National Online

Corporate)

$60 plus $50 Trade Finance Fee

Other Services

(inclusive of handling and communication charges):

Collections presented with instructions to release against

simple receipt or free of payment

$90 for each set of documents (GST inclusive)

Refusal to accept/pay against documents as presented $90

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Letters of Credit Inward - Export/local/stand-by

Advising new credits or amendments  

Charged where documents will be presented to another

bank. Waived if documents are presented to NAB

$90 (new credits)

$50 (amendments)

Drawings – Documents despatched 0.25% of drawing amount (minimum $90) (maximum

$850) plus handling and communication charges of $25

Other Services

(inclusive of handling and communication charges):

Without Recourse

or

Confirmation

Fees are available on application

Back-to-Back

and

Transferable Credits

Fees are available on application (a minimum

assessment fee of $200 applies

Assignment of proceeds (per assignment) $90 (clean)

$90 (documentary)

Discrepancy Handling Fee $40 per set of documents

Acceptance of term drafts drawn on NAB

(not applicable if drawing is done Without Recourse or

Confirmation)

Fees are available on application

Refusal to accept/pay against documents as presented $90

Bank to Bank Reimbursement claims $90

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International Payments

Inward Payments (remittances received)

International drafts/cheques received

Sent for collection in Australian or overseas currency  

• for customers $40 (GST inclusive)

• for non-customers $60 (GST inclusive)

Purchased in Australian Dollars, payable outside

Australia

 

• for customers $40

• for non-customers $60

International drafts/cheques (inward)

Purchased in overseas currency and payable overseas.

Includes payment to Foreign Currency Accounts. Includes

drafts, cheques and dividend warrants etc. and

negotiations under travellers letters of credit. For each

purchase up to and including the equivalent of $15

 

• for customers Free

• for non-customers $20

For each purchase over the equivalent of $15  

• for customers $15

• for non-customers $20

Dishonour

Where overseas bank charges more than one fee, there

can be no rebate of those fees. Where multiple dishonours

are received and all items are processed at the same time,

only one charge is to be levied.

$30 plus collection/purchase charge

Clean Drafts

Drawn on the NAB in overseas currency

• for customers $10

• for non-customers $20

Drawn on the NAB in Australian dollars

• for customers Free

• for non-customers $10

International Transfers Inward (received)

Overseas banks may charge NAB a commission in respect of these transfers, which is included in our fee. Our fee also

depends on the currency of the transfer. This fee is usually deducted from the amount paid.

Transfers to NAB in Australian or overseas currency

Deposited to NAB account Up to $15

or

Deposited to non-NAB account (NAB acting as

intermediary)

Up to $30

Transfers of overseas currency received by NAB and transferred to another bank unconverted

NAB customer Up to $35

Non-NAB customer Up to $35

Documentary Payment Orders and Telegraphic Transfers

Payable against documents other than simple receipt 0.2% of remittance amount (minimum $30) (maximum

$600)

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Outwards Payments (remittances sent)

International Cheques (outward)

International Cheques drawn on banks with currency /

AUD arrangement with NAB

$22

International Cheques drawn on banks without currency /

AUD arrangement with NAB

$25

International Cheques - Re-issue / Refund

This charge covers the cost of placing a ‘stop’ where the

original cheque has been lost / stolen

$30

International Cheques - Repurchase $20

Telegraphic Transfers Outward (sent overseas)

Telegraphic Transfers Outward - using National Online

Corporate or NAB Connect

$20

Telegraphic Transfers Outward - using Internet Banking $22

Telegraphic Transfers Outward - over the counter $30

Telegraphic Transfers Outward – pursuant to Email/Fax

authority or Facsimile Letter of Authority

$35

Telegraphic Transfers Outward - Cancellation, at

customer’s request

$20

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General Charges and Other Trade Services

Trade Finance – International or Domestic

Finance of trade transactions

* Fee is to apply to any initial request and again on any

subsequent requests for a rollover of finance covering:

documentary collections

telegraphic transfers

international cheques

invoices only

Note: Fee is not charged for refinance under Letters of

Credit, except for rollovers.

$50 for each request

Trade Finance - Prepayments $50 plus any economic costs1

TradeAssist

Processing Fee $80 for each drawdown or extension request

Prepayment Economic costs1

1 Economic cost is NAB’s reasonable estimate of its loss (if any) from the early termination of a loan/facility, the early termination of

a fixed rate or a prepayment.

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Foreign Currency Accounts

Account Service Fee2,3 $40 (or currency equivalent) per month

Intra account transfers $30

$20 (using National Online Corporate or NAB Connect)

Deposit/withdrawal of overseas currency notes 2.2% of deposit/withdrawal amount (minimum $30)

(GST inclusive)

2 The Account Service Fee is applicable to a foreign currency account where the value balance falls below USD20,000 (or currency

equivalent) or where the account is overdrawn in excess of your approved overdraft facility limit at any point during the calendar

month. The fee is calculated on the actual daily value balances and debited to your account on the 15th day of the following month

(where this is not a Banking Day, the fee will be charged on the preceding Banking Day). Upon account closure, any account service

fees incurred but not collected will be charged on that day (for the preceding and current month).

3 Currency equivalent is calculated using a rate of exchange to be set by NAB at six monthly intervals on the 15th (where this is not a

Banking Day, then the preceding Banking Day) of February and August to be applied from the first business day of March and

September, respectively, for the following six months period.

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Forward Exchange Contracts

Establishment or Extension Free

Cancellation Free (plus any loss or gain determined by NAB)

Interbank Deliveries/ Currency Settlements $35 plus handling and communication charges of $10

Back to Top

Preparation of this document was completed on 8 December 2011.

Download a copy of the NAB’s “International Trade Services – A Guide to Fees & Charges” from www.nab.com.au/internationaltrade (you will require Acrobat® Reader).

For more information call 13 10 12

8am–8pm EST, Monday to Friday or visit us at nab.com.au

Hearing impaired customers with telephone typewriters can contact us on 1300 363 647

©2011 National Australia Bank Limited ABN 12 004 044 937 ACL/AFSL 230686 60230A1211

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