INTERNATIONAL FINANCIAL MANAGEMENT CHAPTER 7: INTERNATIONAL TRADE FINANCE LECTURER: TRẦN ĐĂNG KHOA TEAM: 05 MEET OUR TEAM Hà Mỹ Duyên 71802193 Nguyễn Hoàng Minh Thùy 71802315 Trần Thị Tuyết Nhung 71801357 Phạm Huy Thông 71802306 Lê Thị Kim Chi 71802177 Phan Ngọc Diễm Trinh 71802335 Phạm Hoàng Lan Anh 71802168 GROUP ASSESMENT TABLE Họ tên Công việc MSSV Mức độ hoàn thành Hà Mỹ Duyên 71802193 Bổ sung Word - Chỉnh sửa PPT Thuyết trình 100% Phạm Huy Thơng 71802306 Thuyết trình 100% Phan Ngọc Diễm Trinh 71802335 Tổng hợp Word- Làm PPT 100% Trần Thị Tuyết Nhung 71801357 Làm nội dung Risks and Benefits 100% Phạm Hoàng Lan Anh 71802168 Làm nội dung Process of Payment 97% Lê Thị Kim Chi 71802177 Làm nội dung Prepayment overall 97% Nguyễn Hoàng Minh Thùy 71802315 Làm PPT 99% OUTLINE 01 OVERALL ABOUT PREPAYMENT 02 PROCESS OF PREPAYMENT 03 BENEFITS AND RISKS DEFINITION PREPAYMENT ➢ The buyer accepts the seller's offer price by the order and transfers a partial or full payment to the seller ➢ The payment occurs before the goods are delivered to the seller TYPES OF PREPAYMENT Full/Complete payment Partial Payment WHEN TO USE? First time buyer Exporters need a stable source of capital Danger of pre-shipment cancellation Importer country has high risk of political risk WHEN TO MAKE PAYMENT When signing the contract Time after the availability of the contract Before the day of shipment WHY MAKE PREPAYMENT? To support the credit for exporter Deposit for the performance of the export contract PROCESS OF PREPAYMENT Telegraphic Transfer ỎOR Wire Transfer TELEGRAPHIC TRANSFER SWIFT/BIC Code SWIFT: Society for Worldwide Interbank Financial Telecommunication BIC: Bank Identification Code Interchangeable Short name Example: Agribank ACB Full name Ngân hàng Nông nghiệp phát triển nông thôn Ngân hàng Á Châu English Name Swift Code Vietnam Bank for Agiculture and Rural Development VBAAVNV X Asia Commercial Bank ASCBVN VX Participants in T/T Remitter Remitting Bank Paying Bank Beneficary o BENEFITS RISKS BENEFITS - IMPORTER ✓ Much better price negotiable from the seller ✓ Ex change rate difference RISKS - IMPORTER ✓ Trustworthiness and capability of the seller ✓ Insecurity of goods during shipping ✓ Wrong product may be rec ✓ ed ogniz0 ✓ If paying in advance, it means putting all the money in one place, leading to a zero turnover BENEFITS - EXPORTER Using the buyer's money to produce, in the short run solves his cash flow problems Gain an advantage in trading There was no risk because he was paid for the goods RISKS - EXPORTER The disadvantage of negotiating prices Risks in Partial Prepayment Exchange rate difference CONCLUSION • Use full payment in the relationship of Subsidaries and Parent Company; long-last cooperate; trust-worthy partner; second and later trades • Use partial prepayment to reduce risks for both exporter and importer THANK YOU FOR YOUR LISTENING