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International Money Orders

International Money Orders can be bought at most banks in the UK and are paid for in sterling or dollars. The bank fills out the order for the customer, then

for a small charge, hands the IMO over, and the buyer sends it to the beneficiary, i.e. the person receiving the money. IMOs can be cashed or credited to the recipient's account.

Bank transfer

Payment can be made by ordering a home bank to transfer money to an overseas account. If telegraphed, the transfer is known as a telegraphic transfer (TT), and if mailed, a mail transfer (MT). The Society for Worldwide Interbank Financial Communications (SWIFT) offers facilities for a 24-hour transfer of money to a beneficiary on its computer systems.

International bankers draft

This is a banker's cheque which the bank draws on itself and sells to the customer, who then sends it to his supplier as he would an ordinary inland cheque. So if you have to pay your supplier £2,000, you purchase the cheque for that amount, plus charges. Usually the receiver's bank should either have an account with the sender's bank, or an agreement.

Promissory notes

A promissory note is not a method of payment but simply a written promise from a debtor to a creditor that the former will pay the stipulated amount either on demand or after a certain date. In effect a promissory note is an IOU (I owe you).

Bill of exchange

The procedure is the same as for the home trade, but shipping documents usually accompany bills when the bank acts as an intermediary in overseas transactions.

Documentary credit

This term is used to distinguish the normal letter of credit, used in business, from the circular letter of credit, formerly used by foreign travellers and now largely replaced by Eurocheques, traveller's cheques, and cash cheque credits. Documentary credits have to be applied for from the buyer's bank, by filling out a form giving details of the type of credit (i.e. revocable or irrevocable), the beneficiary (the person receiving the money), the amount, how long the credit will be available for (i.e. valid until...), the documents involved (bill of lading, insurance, invoice, etc.), and a description of the goods. The money will be credited to the supplier's account as soon as confirmation of shipment is made. This is done when the documents are lodged with the customer's bank. See 9.7-9.9 for documentary credit transactions.

 

6.2.3

Advice of payment

Letters advising payment, particularly in the home trade, tend to be short and routine.

We have pleasure in enclosing our Postal Order/Cheque/bank draft for £... in payment of your statement/Invoice No dated...

I have instructed my bank, today, to transfer £161.00 to your account in payment of your 31 May statement.

We have drawn a postal cheque for £26.00 in payment of your Invoice No. L231 dated 2 August. This can be cashed at any Post Office, or paid into your account,

Letters confirming payment in foreign trade transactions may be more complicated if you want to take advantage of the letter to make certain points, but they can be as straightforward as the home trade letters.



Thank you for your prompt delivery. Please find enclosed our draft for £2,341 drawn on East/and City Bank, Sommerville. Could you please acknowledge receipt?

We would like to inform you that we have arranged for a credit transfer through our bank, the Hammergsbank, Bergen. The transfer is for£3,120 in payment of invoice No. Re1641. Could you confirm the transfer has been made as soon as the correspondent bank advises you?

We have pleasure in enclosing our bank draft for £5,141.53 as payment on pro-forma invoice No. 5512. Please advise us when the goods will be shipped and are likely to reach Barcelona.

You will be pleased to hear that we have accepted your bill and now have the documents. We shall collect the consignment as soon as it arrives in Bonn and honour your draft at maturity.

Our bank informs us that they now have the shipping documents, and will be transferring the proceeds of our letter of credit to your account.

 

6.2.4


Date: 2016-01-03; view: 887


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