international banking and payment options
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TRANSCRIPT
Essentials of ExportingProgram
International Banking and Payment Options
Auburn, MESeptember 27, 2007
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Topics to be Covered
External Requirement – KYC / CIP
Internal Requirement – Do Not Assume
The Sales Agreement
Risk and Cost Spectrum
Payment in Advance
Open Account
Overview of Trade Banking Products
Import / Export Solutions – Pre-shipment / Post Shipment
Types of Bank Borrowing
Commercial Letters of Credit
Standby Letters of Credit
Documentary / Direct Collection
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External Requirement: “Know Your Customer!!”
Very different “global” environment
New export markets – who isn’t selling / buying from China?
Technology improvements - both good news and bad news
• Product Delivery vs. Ability to re-create Bank Products
• Increase in “web” addresses vs. hard copy purchase inquires
Compliance, Compliance, Compliance
USA PATRIOT Act (Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act), Bank Secrecy Act (BSA), Anti-Money Laundering (AML), Boycott Clauses, OFAC Review
• Customer Identification Program (CIP) requirements
Easier said than done…these are not going away!Easier said than done…these are not going away!
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Internal Requirements: Do Not Assume!!
Corporate:
Selling goods internationally is the same as a domestic transaction
Getting paid internationally is the same as getting paid domestically
The money transfer system works the same way overseas as in the US
Access your corporate credit appetite; establish policy
Sales opportunities vs. credit common sense
Establish lines of communication between groups involved with the sale
Assess the country of import and any political risks
• Stable / Unstable / Sanctions in place / FX environment
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Internal Requirement: Do Not Assume
Banking Relationship:
Everything is negotiable……!! Leverage services available from your lender /
separate provider
Know what your bank charges; what did you negotiate?
Know your (Bank) Trade Ops contact!!!
Pre–shipment Goal: Reduce risk to Trade Customer
Provide alternatives; suggest credit mitigation products and programs
Provide training when requested
Post shipment: Processor / Monitor
Act as intermediaries
Facilitate payment on your behalf
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Sales Agreement - The Foundation
All transactions:
Subject to contractual agreement between buyer and seller
Represented by a sales contract
Sales contract should include:
Merchandise description, quantity and value in specific currency
Method of dispatch
• Expected ship and/or latest ship (or delivery) date
• Shipping / Freight terms
Required export / import documentation
Who pays the related costs for freight / insurance?
Method of payment with applicable credit terms
• Include bank information
• Who pays Banks fees?
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TRADE TERMSTRADE TERMS
Open Account
Documentary Collections(Time / Sight)
Unconfirmed Letters of Credit(Time / Sight
Confirmed Letters of Credit(Time / Sight )
Payment in Advance
HIGHHIGH
EXPORTER RISK
LOWLOW
IMPORTER RISK
LOWLOW
HIGHHIGH
Methods of Payment by Risk and Cost
International Methods of Payment
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Risk Assessment Explained
Seller / Exporter Buyer / Importer
High Risk Low Risk
Relies completely on buyer to pay as
previously agreed
Open Account No Risk
Relies on buyer to pay draft on presentation of
documents or at maturity
Documentary Collections
Relies on seller to ship goods as described in
the documents
Risk of own non-performance in adhering
to all requirements in the L/C
Letters of Credit Relies on seller to ship goods as described in the L/C and by when, also stated in the L/C
No Risk – Unless buyer requests an advance payment guarantee /
SBLC
Payment in Advance
Relies completely on seller to ship goods as
ordered
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Payment in Advance
What is it?
Buyer places the money at the disposal of the seller prior to shipment of services or provision of services
Money received via a wire transfer transmitted by SWIFT between Banks.
When appropriate?
Small orders
New Customer - debatable
Buyer has questionable / poor credit history (with you or within industry)
Buyer cannot open an Letter of Credit
Does the exporter (seller) need the proceeds to finance the production cycle?
Will your buyer require the receipt of an advance payment guarantee before sending the down payment? (These are increasing in use!)
Is this competitive?
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Payment in Advance: Exporter’s Be Aware
Payment by Credit Card:
KYC
Merchant Liability
• FX Risk
International Wire Transfers:
What currency is to be received?
• FX Risk
SWIFT Test Key Exchange Required
• Ask your Bank!
Complete transmission instructions must be provided by the sender or the receiving Bank will reject / not accept the transfer
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Payment in Advance
Buyer:
Benefits
No real benefit
Risks
Less control
No assurance goods contracted for will be supplied or received in a timely fashion or in the quantity ordered
High cost
• Negative effect on cash flow; possibly Bank borrowings
Seller:
Benefits
Low Transaction fees
Immediate use of funds
Payment is received before shipment
• Foreign AR turn is impressive
Risks
Term is not competitive
When does seller start their production cycle?
• If payment is not made by due date?
AML Compliance
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Open Account
What is it?
An arrangement between buyer and seller whereby the goods are manufactured and delivered before payment is required to be made• Stated payment due date
• No negotiable instrument evidencing legal commitment
When appropriate?
Established / successful relationship between buyer and seller• Credit terms extended by the seller, to the buyer, may have graduated
over time
• Previously used PIA, L/C’s, and / or collections
Buyer has a good credit rating• Based on external credit information (credit report)
• Based on financial review by seller (credit review) on buyer’s financial statements
Seller has export credit insurance policy for all foreign AR
Exporter: Are you borrowing against this “foreign” collateral?
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Open AccountBuyer:
Benefits
Seller provides financing to buyer for open account term
Low transaction fee
Risks
Possible legal costs in the event of non-payment
Impact of word of mouth in event of non-payment
Otherwise, none
Seller:
Benefits
Ability to meet competitive terms
• Exporter might maintain export credit insurance policy?
Low transaction fee
Risks
Releases title to goods without having an assurance of payment
Late payment / Non-payment
• Strain on seller’s collection team?
High cost
Negative effect on cash flow if terms are financed terms through Bank borrowings –non-eligible collateral
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Import Solutions
Pre–Import: Improves working capital
Domestic Borrowing Structure
Domestic AR @ 75–85%
Domestic Inventory @ 0–25/50%
Post Import: Credit Mitigation Products
Credit Risk Protection:
Import Documentary Collections (non-credit vehicle)
Import L/C’s
Post Shipment Financing:
Banker’s Acceptances
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Export Solutions
Pre–Export - Improves working capital availability using Foreign Collateral
Working Capital Programs:
Small Business Administration
Acceptable Foreign AR @ 90%
Advance against PO’s (Subject to..)
Assignment of Proceeds
Fixed Asset Loans with export working capital
EXIM Bank
Acceptable Foreign AR @ 90%
Exportable Inventory @ 75%
Reduced collateral % on performance based L/C issuances
Post Export - Credit Mitigation Products and Programs
Credit Risk Protection:
Export Documentary Collections (non-credit vehicle)
Export Letters of Credit
Confirmation of the Letter of Credit
Discount of Time Drafts
Short & Medium Term Export Credit Insurance Coverage (Govit & Private Sector)
Discounting insured AR
Medium & Long Term Guarantees
EXIM Bank War Chest – Direct Loans
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Types of Bank Borrowing
(Assumes a credit line has been approved by a bank)
Hard dollar borrowings:: based on a cash advance (loan) which is priced using a specific interest rate.
Soft dollar borrowings:: issuances of contingent liabilities which is priced using a specific fee schedule.
Contingent liability to the customer; subject to something happening (L/C – presentation of “clean” documents)
• Reduces borrowing availability under line by value of L/C’s issued
Contingent liability to the bank; once issued, bank must pay if there is a presentation of “clean” documents
Other type of borrowing:
Cash Collateral:Cash Collateral:
100% coverage with cash or securities, subject to bank policy; Bank approvals decreasing due to KYC requirements
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Letter of Credit Definition
Summary: An irrevocable mechanism for payment; a payment facility
A financial instrument issued by a bank on behalf of its customer (the applicant) by which the bank substitutes its own credit strength in place of its customer (the applicant) in favor of the seller (the beneficiary)
The issuing bank undertakes a commitment to the named beneficiary to pay a stated amount within a specific timeframe, provided the beneficiary complies with the terms and conditions of the L/C
A Letter of Credit is NOT a Guarantee
• It’s an assurance of payment to the exporter so long as the exporter performs per the terms contained within the L/C
EXPORTER: DO NOT ACCEPT AN REVOCABLE L/C!! Why?
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The Players
Letter of Credit
THE IMPORTER
APPLICANT
BUYER
ACCOUNT PARTY
DRAWEE
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The PlayersThe Players
Letter of Credit
THE EXPORTER
BENEFICIARY
SHIPPER
SELLER
MANUFACTURER
VENDOR
SUPPLIER
DRAWER
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The Players
Letter of Credit
THE BANKS
ISSUING /OPENING BANK
ADVISING BANK
CONFIRMING BANK
NEGOTIATING BANK
PAYING BANK
REIMBURSING BANK
ACCEPTING BANK
TRANSFERRING BANK
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Types of Letter of Credit
There are two types of L/C’s:
Commercial L/C – Covering the sale / purchase of merchandise
• Issued by the importer, through their bank, to the exporter, through their bank, as the primary payment vehicle
• Import L/C = L/C issued by the importer to the exporter through the banking channels
• Export l/C = L/C advised to the exporter from the importer through the banking channels
Standby L/C - Issued as a special purpose L/C to support a contractual, financial or other obligation
• Used as a payment vehicle in the event the account party / applicant defaults – secondary payment vehicle
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Advising vs. Confirming Letters of Credit
Rules for Documentary Credits:
Uniform Customs and Practices for Documentary Credits, ICC Publication 600 (UCP 600) – new as of July, 2007
• Binding on all parties unless otherwise expressly stipulated in the credit (what does the L/C state…?)
Advising Bank – notifies the exporter of the opening of an L/C in their favor. The Advising Bank fully informs the exporter of the conditions of the letter of credit without making a payment commitment.
Confirming Bank – underwrites the credit obligation of the issuing bank by adding its own irrevocable undertaking for payment in addition to the issuing bank.
• If discrepant documents are presented by the exporter, confirmation is voided.
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Overview of Commercial Letters of Credit
The specific terms of the L/C should be negotiated between buyer and seller before it is issued
Contingent liability of issuing bank; no liability of advising bank
Contingent liability of confirming bank
Exporter ships after review & receipt of letter of credit and any amendments
Can be self liquidating…..doesn’t have to be
Communicated between banks via SWIFT messages
Society for Worldwide Interbank Financial Telecommunication
www.bic.com
Exporter: Does your advising Bank have a SWIFT exchange with the issuing Bank?
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Commercial Letter of Credit - Payment Terms
Payment Terms:
Can be in US$ or FX Currency
• To hedge or not hedge?
Reflected in the Tenor of the Draft (evidence of debt):
• Sight payment - draft presented
• Time payment - draft presented (allowed to be discounted?)
• X Days Date
• X Days Sight
• Fixed Maturity
Deferred payment - no draft presented
Split - 90% @ sight; 10% @ 60 days sight
Drafts are required in all Trade Documentary Products.
REMEMBER: Banks only deal in documents!!!
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Draft – The Evidence of Debt
Boston, MA U.S.A.
after
Pay to the order of$
Dollars
Value received and charge the same to the account of
.To:
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Commercial Letter of Credit Costs
Who is responsible for payment of the L/C charges? What did you negotiate with the Buyer / Importer / Applicant of the L/C?
Standard L/C clauses for “charges”:
All bank charges are for the account of the beneficiary (or applicant).
All bank charges other than those of the issuing bank are for the account of the beneficiary.
Charge descriptions:
Importers: issuance fee and payment commission.
Exporters: advising fee, payment commission, confirmation fee (if requested), reimbursement fee, discrepancy fee, and courier fee.
“Subject to” charges...: amendment fee, discount charges, transfer of L/C fee, and assignment of proceeds fee.
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Typical Commercial Letter of Credit Costs
Cost: (For Importer & Exporter)
For Importer: Flat issuance fee
For Exporter: Flat advising fee
For Exporter: Flat or variable confirmation fee
For both parties: Flat or variable payment commission - based on draft amount
For both parties: Other charges - both flat and variable, such as but not limited to...
• Discrepancy Fee
• Amendment Fee
• Transfer Fee
• All-in Fee
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Commercial Letters of CreditBuyer / Importer / Applicant:
Benefits
Assured payment will not be made until documentation evidencing shipment of the merchandise is submitted to the Bank
Extended payment terms may be granted by permitting drafts drawn under the L/C to be payable at a future date
Importer can set up a shipping schedule that the exporter must adhere to in order to be paid
An inspection certificate issued by an independent third party may be requested in the L/C to provide assurance to the buyer the merchandise being shipped meets their specifications
Has ability to complete L/C application manually or “on line”
Risks
Does not protect against fraud
Seller / Exporter / Beneficiary:
Benefits
Receives a financial instrument from a foreign Bank that substitutes the buyer’s credit risk with that of the issuing Bank
• Can be confirmed by advising Bank
Protects against order cancellation
Is a primary payment vehicle that provides the highest degree of protection, short of payment in advance
• Transaction documents handled through Bank channels
Has ability to receive L/C “on line”
Risks
If unconfirmed, seller is accepting credit risk of issuing Bank
Must present “clean” documents
• If discrepant; importer must approve
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Standby Letter of Credit
Payment Facility
Beneficiary obtains payment by presentation to a bank of a draft and some form of written demand, which may include a statement that the applicant is in breach of their contractual obligation(s).
Conditions of breach integral part of the language within a SBLC
Uses include: Bid Bonds, Performance Bonds, Advance Payment Guarantee, and Credit Line extension supports
A majority of Standby L/C’s are used for domestic purposes
• Lease security, insurance, airline ticket agency’s,
Can be confirmed
Can include “evergreen” clause (I.E.: auto-renewal - x days prior to expiration date, issuing Bank will indicate if Standby is going to be renewed at next maturity date)
Pricing based on risk; % of L/C amount
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Standby Letters of Credit
Applicant: Benefits
Flexible Bank instrument that can be used to support a wide range of situations
Eliminates tying up cash for long periods of time
Is “soft dollar” borrowing; going against your Bank line availability
• 100% deduction
• Less, if using a export working capital guarantee program
Is the “secondary’ source of funds
• Subject to something happening or not happening
Has ability to complete L/C application Risks
Bank is obliged to make payment under the L/C if it received documents that comply with the L/C terms
Beneficiary: Benefits
Receives a financial instrument from a foreign Bank that substitutes the buyer’s credit risk with that of the issuing Bank
• Can be confirmed by advising Bank Protects against contractual defaults
• Flexible Bank instrument that can be used to support a wide range of situations
Risks If unconfirmed, seller is accepting credit
risk of issuing Bank Must present “clean” documents for
payment
• If discrepant, applicant must approve
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Documentary Collections / Direct Collections
Summary: A method of payment under which documents relating to a particular shipment are released to the importer on payment or acceptance of a documentary draft drawn on the importer (by the exporter)
Types:
Documentary Collections: The exporter sends the “transaction” documents to their Bank with instructions to forward them to the importer’s Bank for payment on a sight or future (time) basis
Direct Collections: The exporter sends the “transaction” documents to the importer’s Bank by using a direct collection cover letter provided by their bank for payment on a sight or future (time) basis • Faster; exporter controls mailing of package to overseas bank
• Cover letter can be completed manually or “on line”
• On line – exporter tracks activity in real time
Use:
Quasi-open account - “Know your customer”
• Buyer is deemed an “acceptable” credit risk
• The buyer and seller utilize their banks as intermediary collection agents
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Documentary Collections / Direct Collections
Process:
Process initiated by Seller (Exporter)
Seller ships; forwards documentary collection cover letter and title documents to Buyers bank
Buyers Bank acts as a collecting agent for Seller; No credit position taken by Buyers Bank
Risk of non-payment still exists
Rules for Documentary Collections:
Uniform Rules for Collections, ICC Publication 522 (URC 522)
• Binding on all parties unless otherwise expressly stipulated in the collection instructions (collection cover letter)
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Documentary Collections / Direct Collections
Tenors:Tenors:
Sight payment (D/P or documents against payment)
• Documents are released to the buyer/importer only against cash payment
Time payment (D/A or documents against acceptance)
• Documents are released to the buyer/importer only upon the buyer’s acceptance to pay at a later date
Players:
Drawer = Exporter / Seller
Drawee = Importer / Buyer
Cost:
Least expensive of all Bank Trade Products.
Because…….?
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Documentary / Direct CollectionsDrawee / Importer: Benefits
More competitive terms than an L/C
Less expensive than an L/C More convenient than opening
up an L/C
Risks
Relies on exporter to ship merchandise described in documents
Less control than an L/C
Drawer / Exporter: Benefits
More competitive terms than an L/C
• Enhances competitive position within market
More secure than Open Account Transaction documents controlled
by buyer’s Bank until payment is obtained (sight) or draft is accepted to be paid in the future (time)
Bank monitors collection and will send out periodic tracers to buyer’s Bank inquiring about acceptance or payment
Risks Less secure than an L/C Process is quasi-open account
• Know your customer!
• Relying on overseas Bank as collection agent
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Summary
KYC
Apply common sense both internally / externally
Internally communicate corporate risk appetite: use / review / amend when and where necessary
Negotiate how payment will occur – don’t leave to last minute
Seek guidance from your trade bank; freight forwarder; etc…
Learn what is available for credit mitigation / export working capital solutions
Negotiate what fees are being charged; who pays for what and when
Exporter – are you making a profit? Why not?
Execute against buyers requirement
Review process; access and amend where necessary
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Incoterms 2000
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Incoterms
INternational COmmercial TERMS
Introduced in 1936; subsequently updated 6 times to keep pace with the expansion / development of international trade
Developed by the International Chamber of Commerce
Accepted by governments, legal authorities and practitioners
Standard trade definitions most commonly used in international sales contracts
Are not credit terms
Are terms of sale –
• used to define cost responsibilities and transfer of risk of loss for goods shipped
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Common Shipping Terms
Sellers Factory
Sellers Factory
DockDock
CarrierCarrier
DockDock
Buyers Factory
Buyers Factory
EX–WORKS
FAS
Unpaid: FOB / FCAFASPaid: CFRCPT / CIFCIP
DAF DESDEQ
DDP / DDU
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Incoterms 2000
Group E Departure (minimum obligation)
Seller only makes goods available to buyer at seller’s premise.
EXW Ex Works (…named place)
Group F Main Carriage Unpaid (as instructed)
Seller is called upon to deliver the goods to a carrier appointed by the buyer.
FCA Free Carrier (…named place)
FAS Free Alongside Ship (…named port of departure)*
• *Change in 2000 has the seller clearing the goods for export
FOB Free on Board (…named port of shipment)
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Incoterms 2000
Group C Main Carriage Paid (contract for carriage)
Seller has to contract for carriage, but without assuming the risk of loss or damage to the goods or additional costs due to events occurring after shipment or dispatch.
CFR Cost & Freight (…named port of destination)
CIF Cost, Insurance & Freight (…named port of destination)
CPT Carriage Paid To (…named place of destination)
CIP Carriage & Insurance Paid To (…named place of destination)
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Incoterms 2000
Group D Arrival (responsible for arrival)
Seller has to bear all costs and risks needed to bring the goods to the place of destination.
DAF Delivered At Frontier (…named place)
DES Delivered Ex Ship (…named port of destination)
DEQ Delivered Ex Quay (…named port of destination)*
• *Change in 2000, buyer is required to clear the goods for import and to pay for all duties/taxes/etc...
DDU Delivered Duty Unpaid (…named place of destination)
DDP Delivered Duty Paid (…named place of destination)
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Incoterms 2000
Group C Main Carriage Paid (contract for carriage)
CFR Cost & Freight (…named port of destination)
CIF Cost, Insurance & Freight (…named port of destination)
CPT Carriage Paid To (…named place of destination)
CIP (Carriage & Insurance Paid To (…named place of destination)
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Incoterms 2000
Group D Arrival (responsible for arrival)
DAF Delivered At Frontier (…named place)
DES Delivered Ex Ship (…named port of destination
DEQ Delivered Ex Quay (…named port of destination)
DDU Delivered Duty Unpaid (…named place of destination)
DDP Delivered Duty Paid (…named place of destination)
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Incoterms 2000
"E" Terms - Point of
Departure
EXW Ex-Works
FAS Free
Alongside Ship
FCA Free Carrier
FOB Free On Board
CFR Cost and Freight
CIF Cost,
Insurance & Freight
CPT Carriage Paid To
CIP Carriage & Insurance Paid To
DAF Delivered At
Frontier
DES Delivered Ex
Ship
DEQ Delivered Ex
Quay
DDU Delivered
Duty Unpaid
DDP Delivered Duty Paid
Warehouse Services and Export Packaging
Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller
Loading Goods on Truck Buyer Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller
Inland Freight Buyer SellerBuyer or Seller*
Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller
Documentation Fees Buyer Buyer Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller
Export/Port Charges Buyer Buyer Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller
Loading Goods at Carrier's Facility Buyer Buyer Buyer Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller
Cargo Insurance ** ** ** ** ** Seller ** Seller *** *** *** *** ***
International Freight Buyer Buyer Buyer Buyer Seller**** Seller**** Seller Seller Seller Seller Seller Seller Seller
Unloading Goods at Carrier's Terminal
Buyer Buyer Buyer Buyer Seller Seller Seller Seller Seller Buyer Seller Seller Seller
Import Duties/Customs Clearance
Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Seller Buyer Seller
Delivery to Final Destination Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Seller***** Seller*****
Un loading Goods at Buyer's Facility Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer
*****Seller pays to the agreed delivery point.
"F" Terms - Main Carriage Unpaid
"C" Terms - Main Carriage Paid "D" Terms - Point of Arrival
Responsiblities of Seller (Exporter) and Buyer (Importer)
* FCA can be at the seller's facility(seller) or at a named consolidator, city, state, country (buyer).
**Buyer should insure, but it is best to state who will pay for the insurance in a quote or contract.
***Seller should insure, but it is best to state who will pay for the insurance in a quote or contract.
****Risk is transferred to buyer when good pass ship's rail.
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Modes of Transport and Transfer of Risk
Group Incoterm Mode of Transport Transfer of Risk
Group E ExWorks (EXW) (named place) Any Mode - Air, Ocean, Rail, Truck Risk transfers when shipper makes goods available to buyer at seller's facility
Group F Free Alongside Ship (FAS) (named port of shipment)
Ocean vessel port to port Risk transfers to buyer upon delivery alongside vessel
Free On Board (FOB) (named port of shipment) Ocean vessel port to port Risk transfers to buyer upon goods crossing the ship's rail
Free Carrier At (FCA) (named place) Any Mode - Air, Ocean, Rail, Truck Risk transfers to buyer upon delivery point agreed buy seller and buyer
Group C Cost & Freight (CFR) (named port of destination) Ocean vessel port to port Risk transfers to buyer upon goods crossing the ship's rail
Cost, Insurance & Freight (CIF) (named port of destination)
Ocean vessel port to port Risk transfers to buyer upon goods crossing the ship's rail, even though seller has contracted for insurance
Carriage Paid To (CPT) (named place of destination)
Any Mode - Air, Ocean, Rail, Truck Risk transfers to buyer upon delivery to first carrier
Carriage & Insurance Paid To (CIP) (named place of destination0
Any Mode - Air, Ocean, Rail, Truck Risk transfers to buyer upon delivery to first carrier, even though seller has contracted for insurance
Group D Delivered at Frontier (DAF) (named place) Any Mode - mainly truck or rail, as long as delivery will be made at
a land port
Risk transfers on arrival at the name place at the frontier as agreed in the buyer/seller agreement
Delivered Ex Ship (DES) (named port of destination)
Ocean vessel port to port Risk transfers to buyer at name destination, but onboard vessel
Delivered Ex Quay (DEQ) (named port of destination)
Ocean vessel port to port Risk transfers to buyer at names destination on the pier
Delivered Duty Unpaid (DDU) (named place of destination)
Any Mode - Air, Ocean, Rail, Truck Risk transfers to the buyer at named destination consistent with buyer/seller agreement
Delivered Duty Paid (DDP) (named place of destination)
Any Mode - Air, Ocean, Rail, Truck Risk transfers to the buyer at named destination consistent with buyer/seller agreement
Incoterms 2000
