L/O/G/O

International SettlementInternational Settlement

Chapter three RemittanceChapter three Remittance

• International exchange 国际汇兑• Reimbursement of remittance cover 汇

款头寸的偿付• The concept of remittance

• Parties of remittance

• Methods and procedures of remittance

• Application of remittance

• International exchange refers to operational activities related with the currency conversion and transfer of funds between countries in order to settle the claims and debts by payment instruments through banks.

In broad sense--the international settlement In narrow sense--international bank remittance• Types:

International exchange International exchange

payer payee

Bank A Bank B

payer payee

Bank A Bank B

contract contract

Remittance: Reverse remittance:

• If the paying bank maintains a current account with the remitting bank(1) or the remitting bank has a a/c with the paying bank(2)

Reimbursement of remittance cover Reimbursement of remittance cover

Remitting bank Paying bank

Vostro a/c (1)in cover,we have credited you’re a/c with us

Nostro a/c

(2)in cover,please debit our a/c with you

If there is no vostro or nostro account with each other,but the remitting bank can find a third bank,with which both the paying bank and the remitting bank maintain current account.

Remitting bank Paying bank

Reimbursing bank A

In cover, we have authorized A to debit our a/c and credit your a/c with them

debit our a/c and credit paying

bank a/c with you

Credit advice

Exercises: please write “cover instruction” for each remittance below.a. The paying bank has maintained an USD account with the

remitting bank. Suppose an outward remittance in USD is made, how do you write “cover instruction” for this remittance?

In cover, we have credited your account with usb. Both remitting bank and paying bank have maintained USD

account with XYZ Bank, New York. Suppose an outward in USD is made, then “cover instruction” ?

In cover, we have authorized XYZ Bank, New York to debit our account and credit your account with them

• A bank, at request of its customer, transfer a certain sum of money to its overseas branch or correspondent bank, instructing it to pay a named person domiciled in that country.

• Based on commercial credit

the concept of remittance the concept of remittance

payee remitter

Paying bank

Remitting bank

② instruction

goods

①Application③ paying

• 汇款人（ remitter/importer ） : Remittance application Submit the same amount of funds and commission For our country, submit documents required by SAFE

• 收款人或受益人（ payee/exporter ）• 汇出行 (remitting bank) ： payment order/P.O. （支付授权书 )should be made out as instruc

ted in the application and indicate the reimbursement of remittance cover ;

outward remittance

• 汇入行或解付行（ paying bank ）： paying in strict compliance with the P.O. and authenticate the rel

evant signature or test key ; usually paying after its receipt of the funds from the remitting ba

nk; clean payment; inward remittance

parties and their obligationsparties and their obligations

Based on the means of transferring funds,• 电汇（ telegraphic transfer, T/T ） the remitting bank sends the P.O. to the paying bank by cable, telex,

or SWIFT, authorizing the paying bank to make payment to the payee. fast ; safe ; limited time for banks to keep the funds the contents of T/T

• 信汇（ mail transfer ， M/T ） the remitting bank transfers the funds by mailing a P.O. cheap but slow procedures for M/T and T/T

• 票汇（ remittance by banker’s demand draft, D/D ） On the request of the remitter, the remitting bank draws a demand dr

aft on its overseas branch or correspondent bank ordering the latter to pay on demand to the payee upon presentation.

convenient and transferable

draft on center中心汇票 procedures for D/D

Methods and procedures of remittanceMethods and procedures of remittance

FM: 汇出行TO: 汇入行DATE: 发电日期TEST 密押OUR REF NO. 汇款编号NO CHARGES FOR US 我行不负担费用PAY(AMT) 金额 VALUE (DATE) 起息日 TO(BENEFICIARY) 收款

人MESSAGE 附言ORDER/BY ORDER OF (B/O) 汇款人COVER 头寸拨付

The contents of T/TThe contents of T/T

收款人：

PAY TO BANK （收款人的帐户行） FOR CREDITING A/C NO. OF 收款人

Remitting bank: bank of Asia, Tianjin

Paying bank ： bank of Asia, Luxemburg

Date of cable: 9 June Test:2563

Ref No.208TT0219

Amount:USD 1,660.00

Payee:Marie Clauda Dumont,Luxemburg

account No.0-164/7295/550 with

Banque International du Luxemburg

Message:payroll

Remitter:Crystal Palace Hotel,Tianjin

Cover:Debit our H.O. account

FM: bank of Asia, Tianjin

TO: bank of Asia, Luxemburg

DATE: 9 June

TEST 2563 OUR REF208TT0219

NO ANY CHARGES FOR US

PAY USD 1,660.00

TO Banque International du Luxemburg

FOR CREDITING A/C NO. 0-164/7295/550

OF Marie Clauda Dumont,Luxemburg

MESSAGE payroll

ORDER Crystal Palace Hotel,Tianjin

COVER Debit our H.O. account

payeeremitter

Paying bank

Remitting bank

(1) (2)(3)

(4) (5) (6)

(7)

(1)Remittance application with funds and commission;

(2)receipt

(3)sends P.O. /telex/SWIFT instructing paying bank to make payment

(4)after authenticating, notifies the payee

(5)upon receipt, the payee provides the paying bank a receipt

(6)the paying bank debited the remitting bank’s a/c and make payment

(7)sends the debit advice and payment receipt from payee to the remitting bank

(8)the debt is discharged

(8)

remitter payee

Remitting bank

Paying bank

1) D/D application

2)Bank demand draft

3)bank demand draft

4)Presenting 5)payment

6)Debit advice

Collecting bank

• 银行开出的以票面货币清算中心城市的银行为付款行的汇票。

• 出票行：汇出行 付款行：清算中心的代理行• 特点： 购票人将中心汇票交收款人，收款人可委托当地银行

托收或买入，还可转让。 汇出行不寄票根，不拨头寸，当中心汇票提交付款行

时，借记出票行的帐户以付款并向其寄送借记报单。从出票到付款前不占用出票行的资金。

Draft on center Draft on center

• According to the time of shipment and of payment : 预付货款 (payment in advance) :pay at the time of order(ca

sh with order) or prior to shipment of the goods, commonly used in specialized and capital intensive goods.

货到付款（ payment after arrival of goods :also called open account, say, cash on delivery/ 交货付现。

goods sold （售定） sold on consignment （寄售） 凭单付汇 (remittance against documents)

• Characteristics of remittance risky Unbalanced capital burden Simple procedures and cost-efficient

Application of remittance Application of remittance

出口合同规定的支付条款为装运月前 15 天电汇付款，买方延至装运中始从邮局寄来银行汇票一纸，为保证按期交货，出口企业于收到该汇票次日即将货物托运，同时委托银行代收票款。一个月后，接银行通知，因该汇票系伪造，已被退票。此时，货已抵达目的港，并已被买方凭出口企业自行寄去的单据提走。事后追偿，对方早已人去楼空。

结论： 1 、进口方改变了付款方式 2 、收到汇票并不等于收到钱，当企业无法辨别其真伪时，应

交银行代为审核

Case study Case study