Trade Payment Wizards on the Internet Simplify International B-to-B Transactions
From the February 2000 edition of Managing International Credit and Collections
Business-to-business transactions over the Internet are the wave of the future. The trick for international credit executives is to find a way to facilitate the receipt of payment of these transactions. John W. Dunlop, president of AVG Trade Group, has come up with an innovative way to accomplish this. Called AVG Trade Payment Wizards, it was developed with the support of California Bank and Trust's International Banking Group.
The Trade Payment Wizards (TPW) provides business-to-business Internet Web sites with an international payment method that is trade-finance based. It can be used for any size transaction, and transactions between two countries can also be managed. The only software required is Adobe Acrobat 4.0. The TPW consists of:
- The transaction information form; and
- The bank collection request and demand draft or letter of credit instructions
All the blank forms are located on the AVG Web site (www.avgtsg.com) and can be downloaded for free. The seller completes the transaction information form with the buyer information, wire transfer instructions, and the sales terms.
The information form populates the corresponding fields of the CBT International Documentary Collection and Bill of Exchange to accomplish the payment function. The choices of waiver, protest, tenor, and notification are preset to eliminate delay and confusion.
The following variables are restricted to a list of choices:
All bills of exchange are two-party drafts between the buyer and the seller.
How It Works
Business Web sites can link to the TPW (www.avgtsg.com/wizards.htm) page. Sellers can then select one of the required payment methods:
Cash in advance TPW. It uses the process of an international documentary collection against draft or clean collection. The bill of exchange with sight tenor is sent without documents for wire transfer payment to the seller.
Payment against documents TPW. It uses the process of an international documentary collection against documents. The bill of exchange with sight tenor is sent with attached documents, representing title that are exchanged for payment. Payment is wire transferred to the seller.
Payment against acceptance TPW. It uses the process of an international documentary collection against trade acceptance. The bill of exchange is sent with a time tenor of up to 180 days with attached documents.
Commercial letter of credit TPW. It uses the export letter of credit instruction sheet to advise the buyer of the amount and the terms and conditions of the credit for payment.
Complete the TPW field information for the buyer, seller, and include the seller's wire instructions.
Print, sign, and attach the draft and shipping documents to the collection request. Send them to California Bank & Trust in Los Angeles. The bank will send the collection to its corresponding bank for presentation to the buyer and wire transfer to the seller's account.
If a letter of credit is used, print, sign, and send the letter of credit instructions to the buyer. The bank will advise the exporter when the letter of credit has been issued. Of course, the exporter may contact AVG to manage the credit and prepare documents. Regular readers of this newsletter will remember that AVG offers a letter of credit over the Internet service (www.avgtsg.com).
If users desire, they can become customers of the bank and have access to the bank's proprietary Internet-based trade finance system to track all their transactions. Although there is no charge for use of the wizards, normal banking fees will apply.
Dunlop points out a few of the many benefits to the TPW. They include:
- Simplicity of the system over the Internet
- Low cost with all fees being deducted from proceeds
- Acceptance in 200 countries that accept UCP/UCC standards
- Digital signature and Internet transmission enabled.
International credit executives who are intrigued by this exciting new mechanism can visit www.avgtsg.com, call Dunlop at 619-692-9648, or e-mail him at firstname.lastname@example.org.