How to distinguish export bill discounting and export bill negotiation.
In simple terms, export bill discounting with banks takes place under the shipments where in no Letter of credit is involved. The term export bill negotiation arises when the shipments under Letter of credit basis.
Once after completion of necessary export procedures and formalities the exporter prepares necessary documents to send to his overseas buyer to take delivery of cargo. This documents includes Commercial invoice, Packing list, certificate of origin, Bill of lading or Airway bill, bill of exchange, quality certificate, and other documents specifically mentioned by the buyer at the time of placing purchase order. If the shipment is under LC terms, exporter has to pay top most attention while preparing documents in order to meet all necessary requirements under the terms of Letter of credit.
After preparing such shipping documents, exporter submits all documents with his authorized dealer bank.
If shipment is under LC terms, the bank cross verifies and satisfies all necessary terms and conditions under letter of credit and ‘negotiate’ the export bills. The invoice amount under the said shipment is credited to exporter’s account once after negotiation of bills after deducting necessary nominal bank charges. Once after realizing amount from overseas buyer, the bank takes back the discounted amount after debiting necessary bank interest to exporter.
If the shipment is under DA or DAP (DP) terms, the bank discounts the bill and credits amount to exporter’s account. Once after realizing amount from overseas buyer, the bank takes back the discounted amount after debiting necessary bank interest to exporter.
You can track your shipment here: Click here for air cargo tracking Click here for sea cargo tracking