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Name
Export Bill Purchase
Introduction
Export bill purchase refers to a short-term financing provided by Bank of China Rotterdam Branch to the exporter after it delivers the goods and submits valid documents under L/C or agreement.
Functions
The product aims to meet the short-term financing need of exporters under L/C or collection. It is classified into document – letter conformity bill purchase under the L/C, document – letter inconformity bill purchase under the L/C, D/P collection bill purchase and D/A collection bill purchase.
Features
1. Acceleration of capital turnover. The exporter can obtain payment before importer makes payment, therefore speeding up the capital turnover.
2. Simplification of financing process. Financing procedures are more convenient compared with those for working capital loans.
3. Improve the cash flow. The financial position of exporter can be improved by increasing current cash flow.
4. Less financial expenses. The exporter can choose the funding currency in accordance with the interest rates of different currencies in Bank of China, so as to minimize the financial expenses.
5. Lowering of the credit extension threshold. For the document – letter conformity bill purchase under L/C, the exporter can apply for bill purchase even without credit line in Bank of China Rotterdam Branch.
Charges
The interest rate for financing will be determined by Bank of China Rotterdam Branch based on Bank of China's rules on trade financing interest rate and charges and negotiation with the customer.
Target Customers
1. Exporters who have limited working capital and have to develop business by rapid capital turnover;
2. Exporters who encounter the temporary difficulty in capital turnover between delivery of goods and receipt of payment;
3. Exporters who discover new investment opportunities with higher yield than the interest rate of bill purchase between delivery of goods and receipt of payment.
Application Qualifications
1. For the document – letter inconformity bill purchase and D/P collection bill purchase, the exporter shall have credit line in Bank of China Rotterdam Branch.
2. For document – letter conformity bill purchase, if the credit line in financial institution can not be occupied, the credit extension threshold shall be equal to that for document – letter inconformity bill purchase; if the credit line in financial institution is available, the credit standing of exporter and other credit extension threshold conditions will not be restrictive.
3. For D/A collection bill purchase, the exporter should have credit line at Bank of China Rotterdam Branch.
Procedure
1. The exporter presents the export documents and application for bill purchase to Bank of China Rotterdam Branch;
2. After examination, Bank of China Rotterdam Branch will sign bill purchase confirmation letter and transfer the money to exporter's account;
3. Bank of China Rotterdam Branch mails the documents to the foreign bank (the issuing bank or a designated bank under the L/C, or the collecting bank under collection) for reimbursement;
4. Upon receipt of documents, the foreign bank advices the applicant under the L/C, or the payer under collection;
5. The foreign bank makes due payment to Bank of China and Bank of China repays the bill purchase money.
Tips
1. Customers shall file a formal bill purchase application to the bank (normally the advising bank or negotiation bank);
2. The applicant under the L/C should be the beneficiary of the L/C;
3. L/Cs restricting negotiation by other banks are not available for application of bill purchase;
4. While applying for bill purchase under the L/C, customers shall try to submit export documents which are in compliance with the terms of the letter of credit;
5. If customers want to finance through bill purchase, the following conditions should be avoided:
(1) The transport documents are non title on the document;
(2) Failure to submit complete documents of title;
(3) Transfer of L/C;
(4) L/C with soft clauses;
(5) Submission of documents with substantial discrepancies.
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