Unit 04 Requisites for Global Business Transactions
After studying this lesson, you will be able to :
•
understand the Buy-Ship-Pay Model;• identify four phases of Global Business Transactions(GBT).
Understanding the processes involved, parties participating, information exchanged and the rules that govern these exchanges is requisite for the conduct of Global Business Transactions (GBT).
Requisites for Global Business
Transaction
A supply chain embraces all activities necessary for goods to be produced and delivered to the final consumer.
• Such activities encompass sourcing of raw materials, preparing for transportation, requesting and import license, preparing documentation for Customs clearance,
payment and delivery to the customer.
• There are many variants of supply chains. Using a supply chain perspective therefore requires the use of a theoretical pattern that simplifies its complexity and can be used as a reference model.
• The Buy-Ship-Pay Model is an example of such a model.
The Buy-Ship-Pay Model (BSP) developed by UN/CEFACT*
describes the main processes and parties in the global supply chain. The BSP model is to:
• ensure the goods are ordered, shipped and paid for while complying with regulatory requirements and supporting trade security (or supply chain security).
• identify the key commercial, logistical, regulatory and payment procedures, involved in the global supply chain • provide an overview of the information exchanged
between the parties throughout its various phases.
Buy-Ship-Pay Model (BSP)
Buy-Ship-Pay Model (BSP)
The BSP model identifies four main business partner types: customer, supplier, intermediary and authority.
• Customer: A party who acquires, by way of trade, goods or services, and requires knowledge of sources of supply, best products/services at the best prices, simpler procedures, reduced restraints and minimum costs of operation.
• Supplier: A party who provides, by way of trade, goods or services, and aims to acquire increased market share, optimum profit, reduced restrictions to market, simpler procedures, reduced documentation and guaranteed payment.
The BSP model identifies four main business partner types: customer, supplier, intermediary and authority.
• Authority: A statutory body existing within a jurisdiction and a specific area of responsibility that administers legislation to regulate trade and/or monitors compliance with existing legislation, and ensures that regulations are enforceable easily/effectively to protect consumer from risk or protect economy.
• Intermediary: A commercial party who provides services to Customers, Suppliers or Authorities within the global supply chain, and provides efficient procedures with minimum of imposed restrictions/delays.
Buy-Ship-Pay Model (BSP)
Business Processes and Transactions included in the BSP Model
Four Phases of GBT
Classification Information Phase Agreement Phase Implementation Phase Follow-up Phase
Procurement / Sales Overseas Market Research / Identify Potential Trading Partners Establish Business Agreement via Negotiation / Order
Deliver. Pay Supplier / Provide Despatch Advice / Provide Receipt Advice
Provide Credit /Debit note
Logistics Book Transport Transport Goods /Provide Status Reports / Pay for Logistics Services
Financial
Services Credit Inquiry Request Credit /Request Insurance
Provide Credit. Provide Insurance
Claims & Dispute Settlement
Regulation InternationalTrade Terms Request Export Licence /Request Health Certificate Clear Goods for Import andExport /Pay Regulatory Charges
The BSP model for the Global Business Transactions (GBT) described above may be classified into four main procedural phases, i.e. information phase, agreement phase, implementation phase and follow-up phase as shown below:
I. Information Phase: Overseas market research, relevant information for potential business transactions and trading partners such as credit inquiry can be acknowledged. Business partners inform themselves about alternative partners for a transaction and their bids, prices, trade terms and further conditions.
II. Agreement Phase: Negotiations between a supplier and
a customer will be held during this phase. At best, it will end in a contract, which determines the rights and duties of the participating parties involved.
III. Implementation Phase: The exchange of products itself and the according payment, logistics, insurance and customs services take place in this phase.
IV. Follow-up Phase: Claims by trading partners involved
may occur and the dispute settlement procedure between the contracting parties will be determined at this phase.
Four Phases of GBT
4 Phases of Global Business Transactions (GBT) Information Phase Agreement Phase Implementation Phase Overseas Market Research /Credit Inquiry Claims & Establishing Agreement/Offer & Acceptance Formation of Contract/Confirmation of Order Performance of Contract/Ship & Pay
Termination of Contract
• Buy-Ship-Pay Model: The Buy-Ship-Pay model developed
by UN/CEFACT describes the main processes and parties in the international supply chain. The Buy-Ship-Pay model identifies the key commercial, logistical, regulatory and payment procedures involved in the international supply chain and provides an overview of the information exchanged between the parties throughout its various steps.
• Bill of Lading(B/L) :
① A document which evidences a contract of carriage by sea and taking over or loading of the goods by the carrier.
② Transferable document of title allowing buyer to sell or pledge goods while in transit by transferring the documents
at any rate where made out “to order”.
③ This is the main document used in shipping and must be clean which explains whether the goods were taken on board in perfect condition.
④ This is a document of title to the goods shipped on board. This is a document, without which delivery of the goods cannot normally be obtained.
• clear goods : The documented permission to pass that a national customs authority grants to imported goods so that they can enter the country or to exported goods so that they can leave the country. • Commercial invoice : A commercial invoice is a
document used in foreign trade. It is used as a customs declaration provided by the person or corporation that is exporting an item across international borders. A commercial invoice must also include a statement certifying that the invoice is true, and a signature.
• consignee : the consignee is the entity who is financially responsible (the buyer) for the receipt of a shipment
• consignor : The consignor, in a contract of carriage, is the person sending a shipment to be delivered whether by land, sea or air.
• credit inquiry : A transaction whereby a bank or other credit-issuing institution views an individual's credit report in connection with a loan or credit card application. The purpose of a credit inquiry is to evaluate an individual's likelihood to repay money that is lent to them (known as creditworthiness).
• freight forwarder : a person or company that organizes shipments for individuals or corporations to get goods from the manufacturer or producer to a market, customer or final point of distribution.
• insurance policy : In insurance, the insurance
policy is a contract (generally a standard form contract) between the insurer and the insured, known as the policyholder, which determines the claims which the insurer is legally required to pay. In exchange for an initial payment, known as the premium, the insurer promises to pay for loss caused by perils covered under the policy language.
