Establish payment guarantee

Case Study

Title: Export of Cassave and Maize from Cambodia to China, 2014

Corridors and Routes: Sihanoukville Autonomous Port - Hong Kong

Trade Product: Maize

Trade Type: Export

Process Analysis: Export from Cambodia

Exporting Country: Cambodia

Importing Country: China

Category: Goods payment arrangement

Country and Procedure Description: Establish payment guarantee (Export from KHM to CHN/Maize)

Related Rules, Laws and Regulations: -Uniform Custom and Practice for Documentary Credit, International Chamber of Commerce Publication No. 500.

Actors and Participants: -Exporter and exporter’s Bank
-Importer and importer’s Bank

Input Criteria to Enter or Begin the Business Process: -Exporter and importer concluded sales contract and trade terms.

Activities and Associated Documentary Requirements: 1 Importer applies for LC by submitting Application for Irrevocable LC and Proforma Invoice to importer’s bank. 2 Importer’s bank reviews submitted documents and evaluate importer’s credit risk. 3 Importer’s bank approved the application, issues LC and forwards the same to exporter’s bank via interbank electronic exchange. 4 Exporter’s bank establishes the authenticity of the LC, informs exporter that LC is ready for collection. 5 Exporter collects the LC, determines if it meets terms and conditions stipulated in the contractual agreement. 6 When the LC is acceptable exporter makes the necessary arrangements for the delivery of goods. 7 If the LC is unacceptable, exporter to consult it bank. 8 Exporter’s bank notifies importer’s bank. 9 Importer’s bank then consults importer to amend the LC.

Output Criteria to Exit the Business Process: -Payment terms and guarantee established.

Activity Diagrams:

Number of Required Documents: 2

Minimum Required Time: 2

Maximum Required Time: 3

Average Required Time:

Minimum Cost:

Maximum Cost: 3

Average Cost: