International Payment Terms + Eximbank
Person 1 – Introduction + International Payment Terms Overview
Covers:
Opening:
•
Introduce international trade payments
•
Explain why payment terms are important
Mention Main Problems:
•
Distance between buyer and seller
•
Different legal systems
•
Trust issues
•
Currency fluctuations
•
Non-payment risk
Explain:
International payment terms determine:
•
When payment is made
•
How payment is made
•
Which party takes more risk
Mention Main Types (briefly):
•
Advance Payment
•
Open Account
•
Documentary Collection
•
Letter of Credit
Transition:
“Now we will start with the first payment method: Advance Payment.”
______________
👤 Person 2 – Advance Payment + Open Account + Process
Covers:
A. Advance Payment
Definition:
Buyer pays before shipment.
Explain:
Most secure for exporter, risky for importer.
Advantages:
•
Exporter receives money early
•
Better cash flow
•
No collection risk
Disadvantages:
•
Buyer may worry about delivery delay
Advance Payment Flow Diagram:
Buyer places order
↓
Buyer sends payment
↓
Seller receives payment
↓
Seller produces/prepares goods
↓
Seller ships goods
↓
Buyer receives goods
B. Open Account
Definition:
Goods shipped first, payment later.
Explain:
Good for trusted long-term relationships.
Risk:
Exporter bears higher risk.
Transition:
“Other payment methods involve banks as intermediaries.”
______________
👤 Person 3 – Documentary Collection + Process
Covers:
Definition:
Banks handle documents but do not guarantee payment.
Types:
Documents Against Payment (D/P)
Buyer pays first, then gets shipping documents.
Documents Against Acceptance (D/A)
Buyer accepts future payment date, then receives documents.
Process:
1.
Seller ships goods
2.
Seller gives documents to bank
3.
Bank sends documents to buyer’s bank
4.
Buyer pays or accepts bill
5.
Documents released
Advantages:
•
Lower cost than Letter of Credit
Disadvantages:
•
No full bank guarantee
Transition:
“For stronger security, companies use Letter of Credit.”
______________
👤 Person 4 – Letter of Credit Basics
Covers:
Definition:
A bank guarantees payment to exporter if all terms are met.
Why Important:
Reduces risk for both buyer and seller.
Main Parties:
•
Applicant = Importer
•
Beneficiary = Exporter
•
Issuing Bank
•
Advising Bank
•
Confirming Bank (if any)
Key Principle:
Banks check documents, not goods.
Documents Usually Required:
•
Commercial invoice
•
Bill of lading
•
Packing list
•
Insurance certificate
Transition:
“There are several types of Letters of Credit.”
______________
👤 Person 5 – Letter of Credit Types + Full Process
Covers:
Types of L/C
Irrevocable L/C
Cannot be changed without consent.
Revocable L/C
Can be amended/cancelled (rarely used).
Confirmed L/C
Second bank adds guarantee.
Sight L/C
Immediate payment after compliant documents.
Usance / Deferred L/C
Payment at future maturity date.
Transferable L/C
Transferred to another beneficiary.
______________
L/C Process Diagram
Buyer and seller sign contract
↓
Buyer requests L/C from issuing bank
↓
Issuing bank sends L/C
↓
Advising bank informs exporter
↓
Exporter ships goods
↓
Exporter submits documents
↓
Banks examine documents
↓
Payment released
Important Note:
If documents contain discrepancies, payment may be delayed.
Transition:
“Besides payment systems, exporters also need financing support.”
______________
👤 Person 6 – Eximbank Financial Tools + Credit Opportunities
Türk Eximbank
Covers:
What is Eximbank?
State-supported export credit institution helping exporters.
Main Objectives:
•
Increase exports
•
Improve competitiveness
•
Provide finance
•
Reduce export risks
Credit Facilities
1. Pre-Shipment Export Credit
Before production/shipment.
Used for:
•
Raw materials
•
Production costs
•
Packaging
2. Post-Shipment Export Credit
After shipment until payment received.
Used for working capital.
3. SME Export Loans
Special support for small businesses.
4. Buyer’s Credit
Foreign buyers receive financing to purchase Turkish products.
5. Foreign Exchange Loans
FX-based loans for exporters.
Benefits:
•
Lower financing cost
•
Better liquidity
•
Competitive pricing
Transition:
“Eximbank also protects exporters through insurance programmes.”
______________
👤 Person 7 – Eximbank Insurance Policies + Conclusion
Covers:
Insurance Policies Provided by Eximbank
Short-Term Export Credit Insurance Programme
Protects exporter when buyer does not pay.
Covers:
Commercial Risks:
•
Insolvency
•
Bankruptcy
•
Refusal to pay
Political Risks:
•
War
•
Transfer restrictions
•
Government actions
•
Import bans
Benefits:
•
Safe market expansion
•
Easier access to finance
•
Stronger confidence