Methods of international payment 1, Cash in advance 2, Letter of credit 3, Document collection 4, Open account

Method Usual Time of Payment Goods Available To Buyer Risk to Seller Risk to Buyer Comments

CASH IN ADVANCE

Before shipment

After payment

None

Seller's goods must be special in one way Complete. Relies or another, or special on seller to ship circumstances prevail exactly the goods over normal trade expected, as practices (e.g., goods quoted and manufactured to ordered buyer-only specification). 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. 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. Credit can be changed only by mutual agreement, as stipulated in a sales agreement. Becomes open account with buyer's bank as collection agent. Foreign bank may have problems making payment in

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.

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.

UNCONFIRMED IRREVOCABLE CREDIT

Same as above

Same as above

Seller has single Same as above bank assurance of payment and seller remains dependent on foreign bank. Seller should contact his banker to determine whether the

issuing bank has sufficient assests to cover the amount.

sum or timeliness. 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.

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.

On SIGHT DRAFT presentation (with documents of draft to against acceptance) buyer.

A draft can be a collection instrument used to exchange possession and title to If draft not goods for payment. honored, goods Seller is essentially Assures shipment must be returned drawing a check After but not content, or resold. against the bank payment to unless inspection Storage, account of the buyer. buyer's or check-in is handling, and Buyer's bank must bank. allowed before return freight have pre-approval, or payment. expenses may be seek approval of the incurred. buyer prior to honoring the check. Payble upon presentation of documents. Payable based upon the acceptance of an Assures shipment obligation to pay the but not content. seller at a specified Time of maturity time. Although a time allows for draft has more adjustments, if collection leverage agreed to by than an invoice, it seller. remains only a promissory note, with conditions. None All terms of payment, including extra charges and terms should be mutually understood and agreed upon prior to

TIME DRAFTS On maturity (with documents of the draft against acceptance)

Before payment, after acceptance

Relies on buyer to honor draft upon presentation.

OPEN ACCOUNT As agreed, usually by invoice

Before payment

Relies completely on buyer to pay account as agreed

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 I 1 2 3 4

Giao dch Mc ph TH TN DNG XUT KHU Thng bo th tn 12USD dng

Thng bo th tn dng do ngn hng trong nc chuyn n Thng bo tu chnh th tn dng Thng bo tu chnh th tn dng do ngn hng trong nc chuyn n Chuyn tip th tn dng n Ngn hng khc Chuyn tip tu chnh th tin dng n Ngn hng khc Kim tra, x l b chng t Thay th/b sung chng t sau ln gi u tin Thanh ton b chng t Thanh ton L/C chuyn nhng Chuyn nhng th tn dng 5USD

Ti thiu

Ti a

10USD

5USD

5 6 7 8 9 10 11

20USD

15USD 10USD 5USD 0.15% 0.10% 20USD 20USD 150USD 120USD

- Khng thay th
chng t

30USD 0.10% 20USD 150USD

- Thay th chng t 12
Tu chnh chuyn nhng

- Tng s tin - Tu chnh khc 13 14 15 II 1 1.1 1.2

Xc nhn th tn dng ca Ngn hng i l pht hnh Chit khu chng t XK Ph gi chng t

Nh pht hnh L/C tnh trn s tin 30USD 2%/nm Li sut theo tha thun Theo ph thc t pht sinh 100USD

TH TN DNG NHP KHU Pht hnh th tn dng

Phn k qu 100% Phn k qu di 100% - Tr gi L/C di 1,000,000 USD - Tr gi L/C t 1,000,000.00 USD tr ln (L/C tun hon thu ph trn c s tng tr gi) 0.15% 20USD 500USD 0.075% 20USD 500USD

0.1%

4,000USD

2 2.1 2.2

Ph tr chm
Phn k qu 100% Phn k qu di 100% hoc Min k qu Di 1 nm Trn 1 nm 0.05%/thng 0.1%/thng 30USD 50USD 0.075% 20USD 1000 USD

(Thi gian tr chm tnh t ngy chp nhn thanh ton n ngy thanh ton, tnh trn thng) Tu chnh L/C
- Tu chnh tng s tin - Tu chnh khc Nh pht hnh 10USD 5USD 500USD

(Nu tu chnh c s tin v iu khon khc th ty mc phc tp c th thu c hai loi ph)

4 5

Pht hnh L/C s b (draft) K hu vn n/lp UQNH Lp bo lnh nhn hng

10USD 5USD 50USD

6 7 8

Thanh ton th tn dng Hu th tn dng Ph thu ca ngi hng - in ph

0.20%

20USD

500USD

10USD + chi ph pht sinh thc t

10USD 30USD 50USD 20USD

- Ph sa i - Ph sai bit - Ph do thiu b

chng t copy

III 1

(Ty tr gi L/C, b chng t m TTQT c th quy nh mc ph cao hn) BO LNH NGOI NC

Pht hnh Th bo = Ph pht hnh bo lnh lnh hoc Stanby L/c trong nc ca loi hnh (%/thng, ph tnh tng ng + 0,01%/thng trn thng) Tu chnh Th bo lnh hoc Stanby L/C

- Tu chnh tng s
tin

Nh pht hnh th bo lnh 10USD 30USD Nh pht hnh th bo lnh 15USD 12USD

- Tu chnh khc - Tu chnh do ngi

hng chu

3 4 5 6

Bo lnh thanh ton hi phiu tr chm Hu th bo lnh

Thng bo th bo lnh ca ngn hng khc

Thng bo tu chnh th bo lnh ca NH khc Xc nhn th bo lnh (%/thng, ph tnh trn thng) Ph thng bo nh thu - Sc

10USD

7 IV 1

= Ph xc nhn bo lnh trong nc + 0,01%/thng

100USD

NH THU NHP KHU

2USD/t 5USD/b

- B chng t

Ph x l nh thu (tr trn s tin thanh ton)

- Sc - B chng t 3
Thanh ton nh thu

5USD/t 0.05% 0.15% 0.15% 10USD + ph thc t pht sinh 5USD 10USD 100USD 300USD 300USD

- Sc - B chng t 4 V 1 2 3 4 5 6
T chi thanh ton nh thu nhp X l chng t nh thu Ph gi b chng t Thanh ton nh thu xut Sa i ch th nh thu Thay th/b sung chng t sau ln gi u tin Hu nh thu theo yu cu ca ngi nh thu

NH THU XUT KHU

5USD Theo thc t pht sinh 0.15% 10USD 5USD 10USD + ph pht sinh (nu c) 10USD 150USD

VI 1

THANH TON KHI NHN CHNG T (CAD) CAD xut khu - Nhn chng t gi
i

5USD 0.15% 10USD 150USD

- Thanh ton CAD CAD nhp khu - Ph bo lnh theo

CAD

0.25%/qu 0.15%/qu

30USD 10USD 150USD

VII 1

- Thanh ton CAD CHUYN TIN

Chuyn tin ra nc ngoi

- Thanh ton chuyn

tin

0.2% 10USD

5USD

400USD

- Tu chnh/hu lnh

chuyn tin, tra sot

- Cp giy xc nhn mang theo ngoi t ra nc ngoi 2

Chuyn tin n

10USD

- Thu ngi th
hng trong nc

0.05% 10USD Thu theo biu ph p dng cho cc NH i l

5USD

100USD

- Thoi hi lnh
chuyn tin

- Ph thu theo yu
cu NH chuyn tin n

VIII

IN PH
SWIFT

- Pht hnh LC/th

bo lnh/chuyn nhng LC

20USD 5USD

- in khc
Mng truyn thng khc

Thu theo thc t pht sinh. Ti thiu thu nh ph ca mng 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 markets 1.6 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 importers 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 Exporters/Suppliers bank to make payment within the specified time when the Exporter/Supplier presents documents as indicated in L/C that Vietcombank opened upon the Importers 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 Vietcombanks 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 Importers 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 exporters 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 cover 1.2 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 ICCs and SWIFT organisations 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 Buyers 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 abovementioned regulations, you need to send Vietcombank such documents as: Ministry of Finances approval on the usage of the Government and ODAs 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 Vietcombanks 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 Vietcombanks 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 Vietcombanks 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 Vietcombanks 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 Costs Jump to: navigation, search
Unit 4.8Financial 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 Bankers 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.

Bankers Acceptances Fees[edit]

A bankers 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 bankers draft cost of receipt of transfers cost of issuing bankers 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 Charges Effective 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 customers 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. Back to Top

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

Refusal to accept/pay against documents as presented

Extension of term bills on instructions of remitting party $90 per service Where documents are received with instructions to be released free of payment and item is finalised in NABs records

Previously accepted bills received for collection and payment

Endorsement or Avalisation Fee

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

(minimum $90) from the date of Endorsement/ Avalisation/ Release of documents against Trust Receipt and NAB accepts responsibility for eventual payment 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 /

$22

AUD arrangement with NAB

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 customers 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:

$50 for each request

documentary collections telegraphic transfers international cheques invoices only

Note: Fee is not charged for refinance under Letters of Credit, except for rollovers. Trade Finance - Prepayments $50 plus any economic costs1

TradeAssist

Processing Fee

$80 for each drawdown or extension request

Prepayment

Economic costs1

Economic cost is NABs 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)

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).

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 NABs 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 8am8pm 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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A guide to International Trade Services Fees and Charges (PDF, 179KB)

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