Difference between T/T and O/A payment terms
No translation in your language yet — showing the English version
I am a beginner in trade. I was told that this export transaction will proceed under the O/A payment term, and that I need to provide my company's bank account details to the overseas importer. I would like to know what this means.
Answer 1
- 01. T/T: This is a method where the importer transfers funds to the exporter's foreign exchange account. The bank acts merely as a transfer agent and bears no responsibility if the importer fails to make the payment on time. T/T is categorized into advance payment before On Board (e.g., T/T in Advance) and deferred payment after On Board (e.g., T/T 30 Days after B/L date). 2. O/A (Open Account): This is a condition corresponding to deferred T/T payment, where the exporter receives shipment proceeds by selling accounts receivable to a bank after On Board, and the importer makes a T/T payment to the exporter's bank in the country of export (the bank purchasing the receivables) notified by the exporter after shipment. After shipment, the exporter submits copies of shipping documents (originals are delivered directly to the importer) and the export declaration certificate to the bank in the country of export to receive advance payment, and after a certain period, the importer settles the payment into that bank account in the country of export rather than the exporter's own account. 3. Recourse/Non-recourse: To utilize O/A, exporters require a certain credit rating or higher. If the bank fails to receive payment from the importer after purchasing the receivables, it may claim a refund from the exporter (Recourse), but it can also purchase them on a non-recourse basis. If the bank requires a guarantee as a condition for purchasing the receivables, exporters can utilize products such as export credit guarantee products from the Korea Trade Insurance Corporation (K-Sure).Machine translated
Write an answer
0
Comments 0