What are the advantages of BPO (Bank payment Obligation) for exporters?
Bank payment obligation (BPO) is the newest payment method in international trade. As of  24.June.2013 Uniform Rules for Bank Payment Obligation have been effective. URBPO is prepared by ICC. Like other payment methods in international trade, BPO offers some advantages and disadvantages to both exporters and importers. Today I would like to explain the advantages of BPO (Bank payment Obligation) for exporters.




 
































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  • Do you want to learn more about Bank Payment Obligation? You can read my article "What is Bank Payment Obligation?" to learn more about this new payment method in international trade.
  • How does Bank Payment Obligation work?  I have given an example of bank payment obligation on this article. You will understand how Bank Payment Obligation works by reading this article.










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What are the advantages of BPO (Bank payment Obligation) for exporters?
  • Bank payment obligation is a secure payment method in international trade for exporters. BPO can be more secure than letter of credit, because documents will not be checked by humans, which eliminates alleged discrepancies.
  • Bank payment obligation is cheaper than letter of credit. 
  • Exporters could get their money faster from the banks under BPO transactions as documents are checked by an automatic system instantly. 
  • Exporters have more control over the goods until they have been paid by the banks under BPO transactions as shipment documents will be held by the exporters during the BPO process. Exporters do not send paper documents to the banks. Once exporters receive their money from the bank, they dispatch the documents to the importers separately. 
  • Exporters could reach pre-shipment and post-shipment finance in BPO transactions.
  • Once bank payment obligation is opened, it is almost impossible for the importer to cancel the order without the consent of the exporter.
  • Non-payment risk shifts from importer to importer’s bank, which is called obligor bank in BPO transaction.



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