Trusteeship is a common form of payment used in international trade, refers to the exporter entrusting the goods and related documents to the bank to process, the bank in the capacity of an agent to collect the buyers goods, and to deliver the documents or receive payment according to the contract requirements.
The process of receipt usually includes the following steps:
Contract conclusion: Exporters and importers sign contracts before the transaction, agree on the name, quantity, price, shipping time and other terms.
The exporter submits the goods and documents to the bank: After the shipment of the goods, the exporter submits the corresponding transportation documents (such as receipts, invoices, packaging documents, etc.) to the entrusted bank.
Bank audit documents: whether the documents provided by the bank audit conform to the requirements of the contract, international trade practices and international payment rules, if any questions need to communicate and consult with the exporter.
The bank will send the documents to the importer: the bank will send the documents to the importer via international express or interbank communication channels.
Importers pay the goods: After receiving the documents, the importer makes the payment in accordance with the terms of the contract.
The bank pays the goods to the exporter: after receiving the goods, the bank pays the goods to the exporter and completes the payment through the interbank settlement system.
Trusteeship has advantages compared to credit cards, such as flexibility and lower costs, but there are also disadvantages, such as money cannot be expected to be received, and no credit card guarantees.
Overall, customs clearance, as one of the means of international trade payment, can provide convenience for exporters and importers, while also requiring the parties concerned to fully understand and assess the risks prior to the transaction.
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