CHƯƠNG 1

1.73. Meaning of calculation currency and payment currency. They do not need to be the same
in a sales contract.
- Calculation currency is used to demonstrate unit price as well as the sales contract value.
- Payment currency is used to pay off the sales contract value.
=> They do not need to be the same in a sales contract. They depend on consistent of terms and
conditions of currency between the exporter and the importer. (exporter’s currency, importer’s
currency, third country’s currency)
1.86. Who is responsible for contracting for means of transportation under CFR, CIF, CPT,
CIP, DAP, DPU, DDP
The seller
1.87. Who is responsible for contracting for means of transportation under EXW, FCA, FAS,
FOB
The buyer
1.88. The terms of Incoterms 2020 are only applicable for sea and inland waterways
transportation
FAS, FOB, CFR, CIF
1.89. The terms of Incoterms 2020 are applicable for any modes of transportation
EXW, FCA, CPT, CIP, DAP, DPU, DDP
1.90. The terms of Incoterms 2020 specify that the point where risk passes from the seller to
the buyer is at place of departure
EXW
1.91. Terms of Incoterms 2020 specify that the point where risk passes from the seller to the
buyer is at place of destination
DPA, DPU, DPP
1.92. Terms of Incoterms 2020 specify the seller is responsible for export clearance
All, except EXW
1.97. Incoterms 2020 is an optional legal document
The Incoterms are not mandatory rules – for them to receive legal effect, they must be explicitly
incorporated by the parties into their contract. The Incoterms rules are made legally binding by
incorporation into a contract of sale, and the rules make it clear that best practice is always to
refer to a specific edition of the rules.
1.284. Who is disadvantageous as Payment Currency increases
 The buyer
1.285. Who is beneficial when Payment Currency decreases
The buyer
1.81. Currency selection principles in international payments. Currencies are popular in
international payments.
Terms and conditions of currency are using in foreign trade contract. Currency conditions
indicate which currencies to use for calculation and payment in the contract. Calculation currency is
used to demonstrate unit price as well as the sales contract value. Payment currency is used to pay off
the sales contract value. Based on expoter’s currency, importer’s currency and third country’s
currency, exporters and importers selected currency.
Selected currencies must be free convertible currencies, have good reputation and have high
stability, because only these currencies can has wide use value on a worldwide scale, and the holder
of that currency is free or to convert to other currencies.
Hard currency are commonly used international payments. There are 6 popular hard
currencies: USD, EUR, JPY, CHF (Swiss Franc), KHD (HongKong dollar), GBP.
1.82. Factors determining the payment time to be advance payment, at sight payment and
deferred payment in international payments
Based on the characteristic of products, financial capacity, reputation, relationship, and trade
promotion strategy to determine the payment time. For example:
 With payment in advance, if the seller’s products are in extremely high demand, unique, and a
foreign buyer is not a priority for the exporter or a foreign buyer has a poor reputation, the
buyer will have to cash in advance.
 If two parties are in a good trading relationship, and they trust each other, the seller can agree
with the payment method as deferred payment. Or the seller wants to obtain large market
shares, they are willing to offer more attractive payment terms as deferred payment.
1.84. When should “Payment in Advance” be used in International Trade?
Advance payment means buyer pays in advance part or total amount of the contractually due
sum for goods or servicescprior to delivery date.
So, when the expoter are afraid of credit or transfer risks and the importer ensure about the
prestige and reputation of the partners.
1.85. Roles of Incoterms in international trade
- Reduce the uncertainty caused by trade practices in different countries.
- Simplify the negotiations involved in international commerce.
 - Ensure common understanding of obligations
1.124. Terms of the Incoterms 2020 specify that the seller assumes the least responsibilities,
most responsibilities
The seller assumes the least responsibilities: EXW
Most responsibilities: DDP
1.125. Terms of the Incoterms 2020 specify that the buyer assumes the least responsibilities?
The most responsibilities
The buyer assumes the least responsibilities: DDP
The most responsibilities: EXW
1.290. Challenges in doing business with foreign parties
- Foreign Ex and Currency
- Different laws and legal system
- Finance concern
- Language Barriers
- Cultural Differences
- Longer distance and transportation
- Currency Exchange and Inflation Rates
- Commercial risk and country risk
- Exchange risk
1.291.- 1.292. Concerns and Issues of importers and exporters in International Trade
1. Concerns and Issues of importers
- Method of delivery
- Payment: payment method, payment term, other cost such as customs clearance, unloading
cost,.
- Reputation and prestige of expotering company
- Quality of goods
2. Concerns and Issues of exporters
- Payment
- Export clearance
- Insurance for goods
1.126a - 1.126b. Differences between companies from different countries participating in
international trade and In Payments.
 - Different currency, Foreign Ex
- Different laws and legal system
- Different Language
- Cultural Differences
- Complex documents
- Country risk includes war, civil disorder, country default, foreign ex reserve running out,
restriction on foreign currency ex, non-payment by public authorities, change of political
regime, government legislation or monetary policy,…
1. 126a - 1.126b. Methods to hedge these risks.
- Foreign Ex and Currency risk: using forward ex or future ex; Some export credit agencies
operate "foreign exchange risk insur ance" (or foreign currency guarantee), and a foreign
exchange risk insurance operated by an export credit agency has been well accepted for foreign
exchange risk hedging
- Cultural Differences: get knowledge about the parties’s cultural and have some suitable
changes.
- Commercial risk: to conduct thorough credit investigation and evaluate the creditworthiness of
the other party. Some risks can be reduced by obtaining favorable contract terms. Export credit
insurance (or export credit guarantee) is mainly designed for non-payment risk. Thus, export
credit insurance (or export credit guarantee) can be useful for mitigating commercial risks, but
it charges a premium. (phí bảo hiểm)
- Country risk: buy export credit insurances (or export credit guarantees)

1.129. The roles of correspondent banking system in supporting customer to improve their
business
1.131a - 131b. The roles of commercial banks in minimizing risk in customer’s business
activities
1.132. Risks to exporters and importers in international payments and methods to hedge these
risks.