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Unit 7 Terms of PaymentUnit GoalsStarting-upDecide whether the following statements are true or false. Write “T” for true and “F” for false.1.The methods of payment we use in the international trade are chieflyRemittance, Collection and the Letter of Credit.( )2.Among T/T, M/T and D/D, T/T is the cheapest method of payment.( )3.Under collection, there are two terms of payment---documents againstpayment and document against acceptance.( )4.Clean collection refers to a collection of financial documents accompanied bycommercial documents or commercial documents not accompanied by the financial documents.( )5.L/C is commercial credit instead of bank credit.( )6.Beneficiary is usually the exporter and is entitled to use the letter of creditfor payment of the goods.( )7.Sight L/C means the payment can be made until a specific date.( )8.The opening bank is usually a bank in the country of the exporter .( )Categorize the given payment terms into three groups.A.sight creditB. time L/CC. telegraphic transferD. documents against paymentE. mail transferF. documents against acceptanceG. demand transferInitial ListeningBefore listening, please learn the following trade terms by heart.T T a a s s k k11You will hear some phrases covering different payment methods. Repeat for the first time you hear. Then listen again and write your answers down.1._________________2.________________3._________________4.________________5._________________6.________________7._________________ 8.________________9._________________ 10.________________T T a a s s k k22You will hear eight sentences. When you hear the first time, repeat the sentences and pay attention to the stresses and tones. Then listen again and fill in the missing words.1.We only accept payable against shippingdocuments.2.We need to put a deposit in the bank and thus of a smallcompany like ours.3.In order to finalize business, we agree to use .4.Payment is to be made by L/C inChina till the 15th day after the date of shipment.5.The L/C should reach us .6.We would like , since this is your first order.7.What kind of do you have in your mind?8.Customers who buy machines from us , and 70%before .T T a a s s k k33You will hear 5 short conversations. At the end of each conversation, one question will be asked. Both the dialogue and question will be spoken only once. Mark the best answer for each question.1. A. She would like payment by L/C.B. She would like to use other payment terms other than L/C.C. She expects to confirm payment by confirmed and irrevocable L/C.D. She desires to obtain orders in large quantity.2. A. She is not sure when the date of delivery is.B. She can’t accept L/C at 90 days and make sure the L/C is to be opened in time.C. She can accept L/C and expect to have it before delivery.D. She will open the L/C one month before the shipment date.3. A. He can accept D/A or D/P conditionally.B. He wants the woman to change her mind.C. He can’t agree with the woman.D. He will consider accepting payment by D/A or D/P.4. Q: What does the woman ask the man to do?A. The man needs to draw on the woman.B. The woman would like the man to provide evidence to show his good financial standing.C. The woman asks the man to consider other payment terms.D. The woman hopes that the man will agree to her suggestion.5. A. He is not satisfied with the quantity.B. He doesn’t like the woman’s suggestion.C. He can accept 50% by L/C and the balance by D/A.D. He asks the woman whether she agrees to the payment terms.Oral DiscussionBefore discussion, you are given the following advices. Professional Advices1. Payment by T/T is currently more prevailing in deals.(1)T/T is favored in international trade by seller to accommodate regularcustomers.(2)30%T/T in advance with 70% T/T against B/L is used.2. Attention should be paid to the followings under payment by L/C:(1) The validity of L/C may be longer than the shipping period(2) The words ”about”, “approximately” or similar expression used beforethe amount of the credit, or the quantity means 10% more or less.(3) The presentation period should be noted. Documents must be presentedWithin the presentation period, but not later than the expiry date of the creditNow, please complete the following tasks.T T a a s s k k11Work in pairs. Discuss the difference in the procedures of collection and L/C?T T a a s s k k22Work in pairs. Discuss the characteristics of L/C.T T a a s s k k33Discuss the following topic.Imagine you are a seller to persuade your buyer into accepting payment by L/C, put down the persuasive sentences.Intensive ListeningLearn the following by heart before listening.D D i i a a l l o o g g u u e e11..1.Listen to the dialogue and decide whether the following statementsare true or false. Write “T” for true and “F” for false.1.Mr. Smith prefers easier payment terms other than L/C. ( )2.Mr. Wang says payment by L/C is only for business with new client. ( )3.Mr. Wang agrees to 50% payment by L/C and the balance by D/P. ( )4.Mr. Smith agrees to pay a deposit. ( )5.Mr. Smith will open the L/C in compliance with Mr. Wang’s request. ( ) 2.Listen to the dialogue again and complete sentences according tothe contents in the dialogue.1.We only accept payment by confirmed, irrevocable letter ofcredit .2.The trouble is if we can’t collect the payment on time, it will affectour .3.We haven’t known for each other.4.However, , I’d suggest that D/P be accepted in the futurebusiness.5.We promise to get everything ready and after wereceive your order and L/C.3.Take notes for negotiation on payment terms.Mr. Smith’s initial desire on paymentThe payment Mr. Wang insist onThe second suggestion of Mr. SmithThe third suggestion of Mr. SmithThe payment agreed uponD D i i a a l l o o g g u u e e22..Listen to the dialogue and choose the best answer to each of the following questions.1.What payment terms can the seller accommodate the buyer?A.D/P.B. L/CC. D/A.2.What payment terms does the buyer expect?A.D/PB. L/CC. D/A3.What problems does the buyer have?A.He has no enough capital fund.B.He has no strong purchasing power.C.He worries about market tendency and local purchasing power.4.What does the seller imply for the future payment?A.D/PB. L/CC. D/A5.What does the seller expect?A.He expects the buyer will make payment on time.B.He expects the buyer will agree to make payment by L/C.C.He expects the buyer will make payment in advance.Oral presentationIn this part, please make oral presentations after reading the following tasks. You are given the functional sentences to help you.Functional Sentences1. What term of payment do you wish to accept?2. Our usual terms of payment are by confirmed, irrevocable L/C.3. It’s our company’s policy to do the first deal by L/C at sight.4. We would consider accepting terms of D/P if your order were of small size.5. We accept 60 days L/C only for this transaction.6. Perhaps we shall see whether we can agree to D/P terms after we have morebusiness together.7. I’m afraid we are not in a position to accept payment by D/A, since we haven’tknown much about credit status for each other.8. It’s our policy to mak e the shipment after receipt of payment.9. The shipment would be late if you fail to open the credit in time.10. A letter of credit would add to the cost of our imports.11. I’m afraid we must insist on payment by L/C. As a matter of fact, L/Cprotects the seller as well as the buyer.12. In order to conclude the business, shall we meet each other halfway, say,50% by L/C and the balance by D/P?13. Could you make an exception and accept D/A this time?14. At your request, we exceptionally accept delivery against D/P at sight, butthis should not be taken as a precedent.15. We regret that we are unable to meet your request, as it is our usual practiceto ask for sight L/C.16. We shall open a letter of credit in your favor to be settled in Europeandollars.17. L/C should be opened by the buyer 15 to 20 days before delivery.18. How long should our L/C be valid, that is to say, when should we set theexpiry date?19. As the amount of this transaction is very small, we are prepared to acceptpayment by D/P at sight.20. I wonder if we can make payment for this order by documentary collection. T T a a s s k k11Retell the passage of Dialogue 1 with the words and useful sentences used in the dialogue.T T a a s s k k22Work in pairs. Student A plays the role of seller and Student B plays the role of buyer. Make up a dialogue according to the following situation. As the world market has been rather dull recently Mr. White would like to make payment by D/A. However Mr. Lee would not consider his proposal and insist on payment by L/C because payment by L/C is their usual practice with all customers. At last they agree on payment of 50% of the total value by D/A and the balance by L/C.Background InputIn international trade, buyers and sellers are in two countries. Sometimes, they have to do business with unknown traders. If the seller delivers goods before payment has been made, he runs certain risks of nonpayment of the buyer; and if the buyer makes payment in advance, he likewise runs risks of non-delivery of the goods. Thus, it becomes necessary for a third party to act as an intermediate between them to solve the problem of payment. This party is the bank, who either guarantees payment to the seller and examines the seller’s shipping documents for the buyer or makes collection for the seller.The methods of payment we use in the financing of international trade are chiefly Remittance, Collection and the Letter of Credit.(1)Remittance: It is a settlement means by which the bank pays, at the entrustment of theremitter to the nominated beneficiary. It may be divided into telegraphic transfer (T/T), mail transfer (M/T) and demand draft (D/D). T/T is safe and quick, but costs more. M/T is relatively cheaper, but rather slow. D/D is more suitable to the payment against the trade of goods. Telegraphic transfer is the most quickly and is beneficial to the exporter because it enables him to obtain money promptly and accelerates the turnover of funds. But it is disadvantageous to the importer in that he has to bear more cable expenses and bank charges.However, as the importer can make the payment in time, he may establish excellent and win the trust of the exporter.(2)Collection:there are two terms of payment----documents against payment (D/P) anddocuments against acceptance (D/A). D/P calls for actual payment against transfer ofshipping documents. There are D/P at sight and D/P after sight.(3)Letter of Credit: The most often used method of payment in our international trade is the L/Cwhich is a reliable and safe method of payment, as in the practice of foreign trade, the importers prefer to gain control over the goods before paying the money while the exporters prefer to get paid before releasing the goods. It not only facilitates trade with unknown importers and exporters, but also gives protection to both importers and exporters.。
