Discuss the process involved in securing payment for exports.

This the last step in an export transaction of getting payment. The exporter can secure payments in either of the following ways :

1. Documentary Bill of Exchange : Under this method, the exporter draws a bill of exchange on the importer asking him to make payments to the specified bank. With this bill, documents to title (bill of lading , marine insurance policy, certificate of origin etc.) are attached. Therefore, this bill is known as documentary bill of exchange.” The exporter's bank will send this bill and documents to its branch or agent in the importer’s country The branch or agent will present the bill to the importer if the bill is market “Documents against Acceptance” documents will be handed over to the importer as his bank after they have accepted the bill. On maturity the bank receives the payment and credit the amount to the exporter's account. Incase the bill is marked “Documents against payment” the documents will be delivered only after the importer has paid full amount of the bill.

2. Discounting the bill : D/A is a time bill as it is payable after a period of usance which may vary from one month to three month. If the exporter wants immediate payment, he may discount the bill with a bank. For this purpose, he will have to submit a is letter of mypothecation to the Bank. This letter authorises the bank the take delivery of the goods and dispose them of incase the importer fails to make the payment on the bill.

3. Bill on Bank : When the importer has furnished a letter of credit the exporter draws a bill on the bank which has issued the letter of credit. The exporter sends the bill along with the documents to his bank for collection of payment. This is known as “documentary credit.