Introduction
Export commercial invoice discounting means an agreement whereby the seller assigns his existing or future accounts receivable to Bank of China for the purpose of financing and services like collection of accounts receivable and sales administration.
Category
According to whether the buyer is notified of AR assignment, both of undisclosed export commercial invoice discounting and disclosed export commercial invoice discounting are provided.
Features
1. Acceleration of capital turnover. Obtaining finance before the buyer pays for the goods, thus speeding up capital turnover.
2. Simplification of financing procedures. Financing procedures are relatively more convenient than that of working capital loans.
3. Avoidance of exchange rate risk. Obtaining financing in advance through discount to avoid adverse changes in foreign exchange rate in the forward market.
4. Lowering of credit extension threshold. For customers taking out credit risk insurance, we will loosen loan approval standards and lower loan threshold accordingly through taking up the quota of the export credit insurer.
5. Financing with recourse to the seller. Once the buyer fails to pay at maturity, Bank of China may exercise the recourse to the seller.
Interest Rate
LIBOR plus basis points. Please refer to related Bank of China's Interest Rates Table for Trade Finance.
Target Customers
1. Sellers who encounter the problem of capital turnover under the open account transaction;
2. Sellers who face the great pressure of RMB appreciation;
3. Sellers who discover new investment opportunities during the period between delivery of goods and receipt of payment, with the expected yield higher than the discount rate of bank finance.
Application Qualifications
1. The business license of enterprises legally approved, registered and annually checked and other valid certifications sufficient to prove the legitimacy and scope of its operation;
2. Loan cards;
3. The account opening permit, and a settlement account with Bank of China;
4. The qualification of import and export operation;
5. Credit lines in Bank of China.
Process
1. Upon receipt of the seller's application, Bank of China appraises and decides the discount level according to relevant credit extension requirements, and signs the Agreement on Export Commercial Invoice Discounting;
2. Sellers deliver goods, issue documents and submit discount application to Bank of China;
3. Upon examining the authenticity of documents and trade, Bank of China provides fund to sellers;
4. If the buyer fails to pay at maturity, Bank of China or the seller will collect the amount. If the buyer fails to pay 30 days after the maturity, Bank of China will take back funds from the seller and charge overdue interest accordingly;
5. If the buyer pays at maturity, Bank of China will first use the amount to cover the principal and interest of finance, and return the balance to the seller.
Our Advantages
Bank of China is the pioneer in providing export commercial invoice discounting service in China. Years of experience enables us to tailor our service to customers' needs and provide you with the best specialized solution to export A/R finance.
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