What is the application of TT in international trade settlement?
People who do cross-border e-commerce all know T/T its full English name is: telegraph transfer.
TT is what we usually call telegraphic transfer, which is a common payment method in trade. The advantages of TT: fast, the seller can get money quickly, high security. Disadvantages: high cost, generally the flow between swifts.
TT as an international trade payment method, there are generally two ways. One is about 30% prepayment T / T as a deposit, that is, after the order is /confirm/ied, the buyer will remit 30% of the payment to the seller. If the goods are shipped by sea, the Seller shall fax the goods to the buyer after receiving the ocean bill of lading to prove that the goods have been shipped away, and then the buyer shall remit the money by wire; If it is express delivery or air transportation, it is difficult for the ocean bill of lading to control the right of goods, so it is necessary to consider paying for the goods before shipment.
TT is a kind of payment method, which has risks for both buyers and sellers. For the seller, although 30% of the payment has been received, there is also the situation that the buyer gives up the goods. For the buyer, the risk is greater, it is likely to pay in advance, the seller does not supply. The probability of this happening is very low. However, prepaid T / T is already an international trade practice, which is fast and much lower than L / C. For small orders of less than $10000 or $20000, it is quite common. And although there are risks, the chances are not big. After all, there are many people who really do business. Effective risk aversion can only rely on communication and understanding before placing an order. There are also many suppliers out of risk considerations, requiring buyers to prepay TT in full or 30%, and pay the rest before delivery, which is basically no risk to themselves, and the same cost is low.
In the professional interpretation of international settlement, TT refers to the way that the remitting bank pays a certain amount to the payee by sending pressurized telegram, telex or swift at the application of the remitter. It is a kind of remittance.
International trade payment settlement methods include: Bill, remittance and collection, letter of credit and others. Remittance, also known as payment, refers to the settlement method in which the debtor or remitter takes the initiative to deliver the money to the payee through the bank. There are three ways of remittance: TT, M / T and D / d.
Commercial credit is the basis of international trade, and both the buyer and the seller usually take maintaining credit as their original intention. No matter what kind of settlement method is adopted, it is necessary to evaluate the credit of both parties before the transaction. It is usually considered by the place of registration, official website, years of trading, corporate resume, activity, etc.