Documents Related To Payments

&
Documents Related To Goods
Submitted by
Amitrajeet Kumar
MBA (ITLM)
1804305002

Monday, April 13, 2020 1

 Documents Related To Payments
 Letter of Credit

 Bill of Exchange

 Trust Receipt

 Letter of Hypothecation

 Bank Certificate of Payment

Monday, April 13, 2020 2

 Letter of Credit
 A letter of credit is a letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the
correct amount.

 In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or
remaining amount of the purchase.

 Due to the nature of international dealings, including factors such as distance, differing laws in each country, and difficulty in
knowing each party personally, the use of letters of credit has become a very important aspect of international trade.

Monday, April 13, 2020 3

 Bill of Exchange
 A written, unconditional order by one party (the drawer) to another (the drawee) to pay a certain sum, either immediately (a
sight bill) or on a fixed date (a term bill), for payment of goods and/or services received.

 The drawee accepts the bill by signing it, thus converting it into a post-dated check and a binding contract.

 There are five important parties to a bill of exchange:

* The Drawer
* The Drawee
* The Payee
* The Endorser
* The Endorsee

Monday, April 13, 2020 4

 Trust Receipt
 A trust receipt is a notice of the release of merchandise to a buyer from a bank, with the bank retaining the ownership title of
the released assets.

 In an arrangement involving a trust receipt, the bank remains the owner of the merchandise, but the buyer is allowed to hold
the merchandise in trust for the bank, for manufacturing or sales purposes.

Monday, April 13, 2020 5

 Letter of Hypothecation
 Written agreement, which authorizes a bank or lender to repossess and sell the pledged item in case of a default.

 In international trade, a letter of hypothecation enables an accepting bank to sell the shipment in case of the non-acceptance
or non-payment of the associated bill of exchange by the buyer.

Monday, April 13, 2020 6

 Bank Certificate of Payment
 It is a certificate issued by the negotiating bank to the exporter that the bill covering the shipment has been negotiated
through it and export proceeds have been received from the importer.

 The certificate indicates the details of the merchandise exported.

 Exporter submits this certificate of payment for establishing that the export transaction has been completed totally by him.

 This certificate is required to comply with the requirements for the discharge of export obligation.

Monday, April 13, 2020 7

 Documents Related To Goods
 Export invoice

 Certificate of inspection

 Packing list 

 Certificate of origin 

Monday, April 13, 2020 8

 Export invoice
 It is a seller’s bill for merchandise.

 It provides information about goods like quantity, number of packages, marks on packing, name of ship, port of destination,
terms of delivery and payments, etc.

Monday, April 13, 2020 9

 Certificate of inspection
 In order to ensure superior quality of goods, the government has made inspection of certain goods compulsory by some
authorized agency like Export Inspection Council of India (EICI).

 After inspecting the goods, the agency issues the certificate of inspection that the consignment has been inspected as
required under the Export (Quality Control and Inspection) Act, 1963.

Monday, April 13, 2020 10

 Packing list
 This document is in the form of a statement regarding the number of cases or packs and the details of the goods contained in
these packs.

 It provides complete details regarding the goods exported and the forms in which they are being sent.

Monday, April 13, 2020 11

 Certificate of origin
 
 This certificate specifies the country in which the goods are being manufactured.

 This certificate enables the importer to claim tariff concessions or other exemptions.

 This certificate is also required in case when there is a ban on imports of some goods from certain countries.

Monday, April 13, 2020 12

 Reference
 https://howtoexportimport.com/Payment-related-documents-in-Export-and-Import-bus-5356.aspx

 https://www.investopedia.com/terms/l/letterofcredit.asp

 http://www.businessdictionary.com/definition/bill-of-exchange-BOE.html

 https://www.investopedia.com/terms/t/trust_receipt.asp

 http://www.businessdictionary.com/definition/letter-of-hypothecation.html

 https://howtoexportimport.com/Bank-Certificate-of-Payment-under-International-Tr-4385.aspx

 https://ask.learncbse.in/t/what-are-the-different-documents-related-to-goods/3448

Monday, April 13, 2020 13

 Thank you

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