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	Ex-Import Procedure(to Way of Payment)
	L/C
	Abbreviation
	International Factoring

Ex-Import Procedure(to Way of Payment)	Home > Helper

Export/Import procedure according to the Non-L/C method

- Trade settlement : Divide in L/C method and Non-L/C method
Non-L/C method : Divided in collection method (D/P, D/A) and remittance method.
- Although the L/C method provides payment guarantee to an exporter by a opening bank, the transaction has number of shortcomings to pay high service fee to banks by the sales involved parties and that the transaction amount is the lowest,
- In the stand point of a exporter, Non-L/C could be profitable transaction as long as a importer's creditability is definite.
- Since the Uniform Rules for Collection of the Commercial paper to regulate a collection method, there is a special trait to this method as a draft transaction, sending documents through banks and collecting payment.
- Remitting method : Since there is no international regulation to regulate this method, the contract terms can be determined freely as long as the contents are not violating the said countries' a forced legislation.

Export/Import method according to the factoring method

[1] Definition

- International factoring is which a transacting non-L/C method trading, a factoring company provides credit research, undertaking commercial risk, offer finance and collect payments etc.
- The transaction party would be an exporter, an export factor, a importer, a import factor, where an export factor conclude an agreement with an exporter and determines export bond limit, and a import factor investigate credit status of a importer upon a import factor's credit investigation request and base on this, notify to an export factor of credit approval concerning the payment guarantee and when the party approve the credit, an exporter can ship the goods safety according to a contract concluded with a importer.

[2] Subject to transaction

- Export-- From Non-L/C document against acceptance term method or remittance base export if decided to receive total export earning within ~ year after shipping, the transaction is excluded between the representative companies.
- Import--As a remittance base import, if decided to pay total export earning through a foreign exchange bank within ~ days after goods or documents are receive, the transaction is possible if obtain a foreign exchange bank's commissioner's approval. Except, the transaction between the representing companies is excluded and if goods are not subjected for the usance the transaction is acknowledge only for the transaction under certain amount.

[3] Procedure

(1) For exporting

<1> Export factoring transaction consulting

- Key items to examine for export factoring

1. The agreement with the debtor about exporting transaction using factoring service.
2. Existence of factoring company in the importing country.
3. Whether the exporting goods and the type of transactions are appropriate for
factoring transaction.
4. Whether the payment terms are appropriate for the related laws.
5. Credit status of the Seller and ability to offer security etc.

<2> L/C approval inquiry

- After having a consultation with a importer who is eligible for factoring transaction inquiry to the import factor to send Credit Approval Request : CAR of the importer.

<3> Credit research

1. The export factor will request import factor for the possibility of guarantee on the debtor.
2. Import factor then investigate the debtor's credit status and notify the import factoring of the limit of liability and the service fee of the import factoring.
3. Investigation period : 20 days (By telegraph 2 weeks)

<4> Export factoring transaction agreement conclusion

1. Submit a summary of the company, business balancing accounts reports for the last 3 years, per debtors, exporting amount per transaction types and product information to the export factor and sign the factoring transaction agreement.
2. Export factor decides limitation on invoice purchasing and export factoring service fee.
3. Since the seller is responsible with debtor's factoring service fee, it requires guarantee to the fee.
4. Arrange payment terms between the seller and debtor upon the approval of credit approval and signed the export contract by clearly stating that the target business is based on the factoring method and obtain export licensing (E/L) from the bank or recommending organizations.

<5> Credit approval of import factoring

- For a seller to have export factoring transaction, a credit approval of a debtor
from a import factor is a must.
- The key details of credit approval

1 The definition of credit approval is that the import factor guarantees payment for the goods if the debtor fail to make payment.
2 A payment will be made on the 90th day from a invoice expiration date.
3 No guarantee if there is a problem with the exported goods or delay due to breach of the contract by the seller.
4 Credit approval works in the method of Credit line and cancellation or reduction is possible. In this case the import factor is responsible to notify the debtor's credit information to the export factor.
5 Even if the import factor reject credit approval, collection basis only (clean collection) method transaction is possible.

<6> Export recommendation
<7> Export license
<8> Request shipping documents Nego and offer entire financing amount.

- An exporter should present invoice Nego request, E/L, export permit, commercial invoice, B/L and transportation documents to an export factor to receive entire financing amount within the invoice amount. At this time, an export factor preempt the interest for the entire financed amount and factoring service fee.

<9> Export clearance
<10>Transferring or negotiating the right of shipping and invoice

- After shipping, request to an export factor to transfer invoice and Nego - Seller should submit "Export factoring assignment of an obligation and a application for purchasing" along with commercial invoice, export permit and shipping document to the bank.
- On the commercial invoice, indicate export assignment of an obligation clauses as per instruction of the import factor.
- The export factor then send shipping document to the oversea debtor. And also notify accounts receivable assignment to the import factor.
- Required documents when requesting transfer of invoice and Nego

1. Export factoring bond transfer and request for Nego
2. Commercial invoice(Indicate invoice transferring statement)
3. export permit
4. transportation documents
5. bill of change

<11>Collecting invoice

- Collecting method

1. Same procedure as L/C method shipping document purchasing.
Apply same interest.
2. The export factor sends shipping document and invoice to the import factor.
Then collects payment.
3. If debtor files bankrupt or in payment default status, the import factor pay the whole invoice amount on the 90 days of the invoice expiration date.
4. If the debtor reject to make payment due to exporter's breach of contract or of the product defect, the import factor does not hold payment responsibility.

(2) For importing

<1> Import factoring transaction consultation

- Examination items of import factor

1. The agreement with the seller about exporting transaction using factoring service.
2. Existence of factoring company in the exporting country.
3. Whether the importing goods and the type of transactions are appropriate for factoring transaction.
4. Whether the payment terms are appropriate for the related laws.
5. Credit status of the debtor and ability to offer security etc.

<2> Determining credit approval limitation and transaction agreement

- The details of transaction agreement

1. The debtor and import factor singes a transaction agreement.
2. The credit line approval will be based on the debtor's credit status, the necessity of the transaction, and the ability of collateral.

<3> Answer to CAR

1. After import factor review the debtor's Credit Line: CL or Individual Credit Approval Request : ICAR), amount approving and the payment period, the factor will then notify Answer to CAR to the seller through the export factor.
2.The seller then request credit approval to the import factor to approve credit.
3. The import factor notifies credit approval within the credit line agreed upon.
4. Notify import factoring service fee etc.

<4> Recommend import
<5> Import license

- Possible if the settlement period is within the fixed period.
(Foreign exchange bank authenticity facts)
- If they rae not subject to usance import, only the transaction within the fixed amount will be approved.

<6> customs clearance
<7> Transportation document delivery

1. Transfer the shipping document to the debtor when it arrives.
2. If not obtained shipping document: Issue L/G: Letter of Guarantee
3. If obtained the shipping document or L/G: Submit Trust Receipt (TR) for the L/G

<8> Settle import earning

- The debtor should settle the payment through a foreign exchange bank on the
payment date as per the importing contract.

1. The debtor deposit the payment to the import factor on the due date per contract
2. In case the debtor delays payment: In principle, the seller is responsible for the interest of the finance.
In case if the debtor sends the payment including interest for the daly as the ontract stated : It will be reimbursed to the seller.
3. if the debtor delays the payment without a dispute: Apply interest rate as purchasing instead of interest rate for delaying. And extend the finance until certain period from the expiration date.
4. In case there is no payment from the expiration date to a certain period without a dispute:
The import factor makes 100% payment under guarantee of the total invoice amount according to the credit approval information.
5. Settle payment on the contract due date.
6. The service fee for import factoring in seller's responsibility in principle.
(Except, if the goods are imported from the Japan, debtor is responsible for the related service fees or interest)
7. Debtor's payment default: The fixed date for the payment by the import factor.
Payment under guarantee including overdue interest