QnA

What are the roles of banks in the four common payment methods?

• Active Role: Banks get involved in the payment process, supporting both Ex and Im, L/C check the accuracy of docs and guarantee payment 

• Passive Role: transfer does and funds-DC, open account, advance payment

What are the risks faced by exporters in the 4 common payment methods?

• Open account:Non-payment. The exporter loses control of the Goods 

• Collection: Importer may fail to accept the B/E , or dishonor the accepted B/E at maturity The Exporter may have to ship the goods back home 

• L/C: few risks . Failure to present compliant does to the bank will result in the Exporter losing the protection of the credit 

• Advance payment: No risks associated with no payment. The exporter receives payment in full before the goods are dispatched

What is the difference between documents against payment (D/P) and document against acceptance (D/A)?

• D/P The B can only receive the documents once he has paid the sight draft . The S retains title to and control over the Goods until he gets payment 

• D/A: The B can get the documents just by accepting payment on a future date. The B writes the word ‘’ACCEPTED’’ on the draft and signs it

How does a documentary collection differ from a letter of credit as a means of financing international trade ?

• Documentary Collection: The bank acts as an intermediary . The Banks do not verify the documents, take risks , nor guarantee payment. The banks just control the flow of documents 

• L/C provides increased assurance to both Ex and Im so long as they fulfil their obligations. The Bank not only verifies the document accuracy and authenticity , but also guarantees payment

Why would an exporter ask for a confirmed letter of credit?

The risks of issuing bank are borne by the confirming bank. If the bank gets out of biz,the confirming is obliged to pay the L/C

When do people use the 4 payment methods

• Open account: 2 sides have long-established trading relations 

• Advance Payment: 2 sides are unfamiliar 

• L/C: the importer’s credit rating is questionable . The Exporter  needs an L/C to obtain financing

• Collection: there is ongoing business relation between the parties, and the importer is situated in a politically and economically stable market

What are the major benefits of efficient logistics operations?

• Cost-saving/Time-saving

• Punctual delivery/ Optimized distribution

• Improved cash flow

• Customer satisfaction

• Responsiveness

What may cargo handling services include?

• Cargo collection and consolidation

• Cargo forwarding

• Transit warehousing

• Cargo tracking and tracingerwezeet

• Documentation handling

• Customs Clearance

What are the five major logistics activities?

• Customer service

• Demand forecasting/planning

• Inventory management

• Logistics communications

• Material handling

What business functions does the supply chain involve?

• Sourcing (Tìm nguồn cung ứng)

• Procurement (Thu mua)

• manufacturing

• material handling

• forecasting

• order processing

• inventory/warehousing management 

• transportation 

• logistics 

• customer service

What is logistics?

is the management of the flow of goods, information and other resources, between the point of origin and the point of consumption

What are the order management costs?

• New Product Release Phase-In and Maintenance: 

• Create Customer Order: 

• Order Entry and Maintenance: 

•  Contract/Program and Channel Management

•  Installation Planning

•  Order Fulfillment:

• Distribution: 

• Transportation, Outbound Freight and Duties

•  Installation: 

• Customer Invoicing/ Accounting

What are the Six Rights of Logistics?

• Right goods

• Right quantity

• Right condition

• Right place

• Right time

• Right cost

What are the elements in the logistics cycle?

Major activities in the logistics cycle 

•  Serving customers. 

• Product selection. 

• Quantification. 

• Procurement.

• Inventory management: storage and distribution.

 Heart of the logistics system 

• Logistics management information systems 

• Other activities- organization and staffing, budgeting, supervision and evaluation 

Quality monitoring 

Policy and adaptability

Why is marine insurance required?

• High probability of risks occurring in transit. 

•  Marine insurance protects against such risks 

•  Marine insurance is a custom in International Trade

•  Carrier's liability is limited

What are the risks excluded from a marine insurance policy?

• Delay 

• Wear and tear 

• Inherent vice 

•  Ullage 

•  Willful misconduct of the assured

What documents are typically requested for material insurance claims?

• Original policy or Certificate 

•  Invoices, packing specifications 

•  Original bill of lading or other transport documents 

•  Survey report or other documents of loss or damage 

• Landing account / Weight notes at destination 

• Any correspondence with carrier

Explain each of the following characteristics of a typical insurance plan

1.  Pooling of losses: Pooling is the spreading of losses incurred by the few over the entire group, so that in the process, average loss is substituted for actual loss.

Pooling implies

•  the sharing of losses by the entire group and 

• prediction of future losses with some accuracy based on the law of large numbers. 

2.  Payment of fortuitous losses: Fortuitous loss is one that is unforeseen and unexpected by the insured and occurs as a result of chance. 

3.  Risk transfer :Risk transfer means that a pure risk is transferred from the insured to the insurer, who typically is in a stronger financial position to pay .the loss than the insured. 

4.  Indemnification: Indemnification means that the insured is restored to his or her approximate financial position prior to the occurrence of the loss

Principles of Insurance

• Principle of Indemnity
  (Nguyên tắc bồi thường)

• Principle of Insurable Interest
  (Nguyên tắc quyền lợi có thể được bảo hiểm)

• Principle of Subrogation
  (Nguyên tắc thế quyền)

• Principle of Utmost Good Faith
  (Nguyên tắc thiện chí tuyệt đối)

Principle of utmost good faith

Principle of utmost good faith: a higher degree of honesty is imposed on both parties to an insurance contract than is imposed on parties to other contracts 

The principle of utmost good faith is supported by three important legal doctrines: 

•  Representations 

• Concealment 

•  Warranty