The procedure for making settlements for imported and exported goods (services) is regulated by the legislation of the Republic of Belarus, and is also subject to international rules for documenting and paying for payment documents.
All settlements related to the export and import of goods and services are carried out through authorized banks.
Payment of foreign trade contracts is carried out, as a rule, in one of the following forms of settlements – an open account, bank transfer, collection, letter of credit.
The form of calculations is established in the international commercial and banking practice methods for processing, transferring and paying for documents of title and payment.
These forms of international settlements are applied on a payment basis for both cash and credit.
The choice of a specific form of international settlements is determined by agreement of the parties.
The applicable forms of international settlements differ in the share of participation of commercial banks in their conduct. The minimum share of bank participation is assumed in the implementation of a bank transfer, i.e. fulfillment of the payment request of the client. The share of banks in the collection operation is more significant – control over the transfer, forwarding of documents of title and issuing them to the payer in accordance with the terms of the principal. The maximum share of bank participation is in the calculations by letters of credit, which is expressed in the provision to the recipient (beneficiary) of a payment obligation, subject to the conditions contained in the letter of credit.
For various forms of calculations, the degree of ensuring the reliability of the payment for the exporter is not the same: it is minimal in the calculations by bank transfers and collection for actually delivered goods and is maximum in the calculations by letters of credit, since it is a monetary guarantee of payment of shipped goods by the bank that opened it.
An open account is one of the forms of settlements in foreign trade. Essence: direct sending to the address of a foreign buyer of both goods and commodity documents, the payment of which the importer makes within the time period specified in the contract. If this period exceeds the terms of the current legislation, then the open account is considered not as a form of cash settlement, but as settlements on credit.
As a rule, with this form of calculations, firms open accounts in their books to each other, which take into account mutual debts (netting). This operation is carried out without the participation of the bank, which can be connected in some cases, mainly at the final stage of operations, when it is necessary to balance and make a transfer of the amount remaining uncovered by the goods.
After the goods are shipped, the exporter makes a record in the books due to the amount in the open account debit, and the importer makes a similar entry on credit to the open account exporter.
An open account thus provides for commercial lending to the buyer. It is always unprofitable for the exporter, since it is associated with increased risk. As a rule, this form is applied between long-term cooperating companies that carry out exchange operations, acting simultaneously in the form of sellers and buyers, between branches of large companies, etc.
The feasibility of using an open account in calculations can be dictated by the following circumstances:
if deliveries are made in small batches regularly on schedule; oncoming deliveries; between branches of large companies.
Bank transfer is a simple order to the bank of its correspondent bank to pay a certain amount of money at the request and at the expense of the transferor to the foreign recipient (beneficiary), indicating the method of reimbursing the payer bank for the amount paid.
Bank transfer is carried out in a non-cash manner through payment orders addressed to one bank to another. Sometimes transfers are made through bank checks or other payment documents. Commodity documents with this form of calculations are sent directly from the exporter to the importer, i.e. bypassing the bank.
When performing a transfer transaction, the transferee bank is guided by specific instructions contained in the payment order.
When conducting a transfer operation, banks take part in settlements by transferring only after the payer submits a payment order to the bank to pay for the contract. At the same time, banks are not responsible for the payment. Banks do not control the fact of delivery of goods or transfer of documents to the importer, as well as the execution of payment under the contract. In this form of settlements, the bank’s responsibilities include only the transfer of payment from the transferor’s account to the transferee’s account at the time of submission of the payment order (Fig. 10).
In international banking practice, bank transfers can be used to pay the advance on the contract if its conditions contain a provision on the transfer of part of the value of the contract (15-30%) in advance, i.e. before the start of shipment of goods. The rest is paid for the actually delivered goods. Advance payment means actually hidden lending to the exporter and is disadvantageous to the importer. In addition, the transfer of the advance creates a risk for the importer of loss of money in case the exporter fails to fulfill the terms of the contract and does not deliver the goods.
In order to protect the importer from the risk of non-return of the advance in case of non-delivery of goods by the exporter in international banking practice, there are several ways to protect:
1. receipt of a bank guarantee for the return of the advance; in this case, a guarantee of a first-class bank is issued before the transfer of the advance payment;
2. use of documentary or conditional translation. Here, the exporter’s bank makes the actual advance payment to his account, provided that he submits transport documents within a certain period of time.