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Product Name
Rong Yi Da
Product Description
Rong Yi Da: In credit sale, Bank of China provides finance to the seller while not occupying the seller's credit line but completely the buyer's, with the prerequisite that the buyer has confirmed in a written form no dispute on the underlying transaction and the receivables, and guaranteed fulfillment of payment duty on due date.
Product Functions
On the condition that the customer's own credit line is not occupied, the product can meet the customer's demands.
Product Features
1. Financing for SMEs with the idle credit line of core enterprises. The product can make full use of the idle credit line of the buyer (core enterprises) to provide financing services based on logistics chains for its surrounding SME suppliers.
2. Optimization of financial statement. The Rong Yi Da business requires the buyer's confirmation on underlying transaction so as to nail down the debts payable, Bank of China can conduct outright purchase of relevant accounts receivables so as to optimize the seller's financial statements.
3. Promotion of business expansion. Since Rong Yi Da product meets the seller's needs of financing, it is conductive to business expansion for both the buyer and the seller.
Eligible Applicants
1. Rong Yi Da service is applied to goods or service trade or other trades generating accounts receivables with credit sale as its payment method.
2. Confronted with urgent financing needs of its upstream customers, the buyer agrees Bank of China to finance for the its suppliers with the buyer's own credit line, in order to reduce internal financial cost and expand business.
Application Requirements
1. With legal verification and registration, the customer should have enterprise legal person business license after annual inspection or other valid documents to prove its operation legitimacy and business scope;
2. The applicant shall has the real qualification of import and export operation, and possess real relationship of transactions that meets Bank of China's requirements on business compliance.
Application Procedures
1. The seller submits the Rong Yi Da Business Application Letter and trade contracts as well as other necessary documents to Bank of China. Bank of China verifies the authenticity of the trade and the documents.
2. Bank of China occupies all of the buyer's credit line, issues the Approval Notice on Rong Yi Da Business Credit Line, and informs the seller about relevant approval results.
3. Bank of China signs the Agreement on Rong Yi Da Risk Undertaking with the buyer.
4. The seller transfers relevant accounts receivables to Bank of China, after it has fulfilled the stipulations under relevant trade contract.
5. Bank of China immediately requires the buyer to recognize the underlying transaction contents under invoices within the period specified in trade contract and requires the buyer to sign the Notice of Assignment/Confirmation Letter of Accounts Receivable after the seller has submitted the documents.
6. Bank of China can conduct financing for the seller with the invoice sum approved as the ceiling; and without occupying the seller's credit line.
7. Bank of China collects the mature accounts receivables from the buyer on a regular basis.
8. On receiving the buyer's payment, Bank of China deducts its fees and principal and interest, transfers the balance (if any) to the seller within one working day.
Case
As a listed company, Company A is a world famous liquid crystal display (LCD) manufacturer with an annual turnover of several billion USD. Company A has a large number of domestic supporting suppliers, to which it makes payments by telegraphic transfer and acceptance draft, and the settlement period is generally two months after goods arrival. Bank of China has approved a relatively high credit line for Company A with certain idle part of the line.
Most of suppliers of Company A are SMEs, which have no credit line or inadequate credit line in banks. In order to provide support to its suppliers and to maintain the usance payment settlement method, Company A decides to apply for the Rong Yi Da business in Bank of China. After Bank of China signs the Rong Yi Da business agreement with Company A's suppliers, Bank of China provides finance to Company A's suppliers, under the condition that Company A's credit line is fully occupied instead that the supplier's credit line is occupied.
The Rong Yi Da service solves the suppliers' capital problems of production, while Company A also maintains its usance payment method and keeps good relationships with its suppliers.
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