Search Index

Export Proceeds in Other Currencies

The principle remains to intercept the funds from abroad at a point physically and chronologically close to the account to which the funds are directed.

Belgian Franc payments, for example, can be requested from an importer or foreign dealer in the form of a Belgian franc check sent directly to the bank holding tile exporter's model B documents (the formal documents that show pertinent details of the export and are necessary for the crediting of exports proceeds to it domestic account), the Belgian house bank will present the check directly to the clearing system after matching payments and documents and immediately credit the proceeds to the exporter's account after clearance.

Both acceleration of receipts and compliance with exchange control are assimilated in such a system. Similar mechanisms can be inaugurated for British exporters invoicing in pounds sterling, Dutch exporters invoicing in guilders, and so forth. Export proceeds that are in currencies other than the currency of the seller also can be accelerated, usually through an international bank and its correspondents. For example, a U.S. or European exporter may have marketing reasons to bill its Swedish customers in Swedish kroner.

There are in Sweden no foreign bank branches that form part of an international group which can be used to rationalize payments. However, kroner can be collected within Sweden by one of the major commercial banks through the bank giro system.

The giro system is a domestic arrangement of money transfer found in many European countries. One type of giro is offered through the post office system; it can be used by commercial banks and commercial firms as well as by individuals. In some countries, giro transfers, which are effected by a simple transfer form, have become the primary method of local payments where the use of bank checks is not widespread. Payments are made through the central network of post offices rather than through a bank.

The payor sends transfer notice to the giro office to transfer funds to the payee, whose account is credited under advice while that of the payor is debited. This type of bookkeeping transfer system is quite efficient; amounts can be credited to other giro accounts within the country very rapidly. In some countries, there is an analogous system operated by the banks themselves.

By use of a bank giro arrangement for the Swedish transaction example given earlier, the kroner would be credited to an accumulation account in the exporter's mime maintained by a bank in, say, Stockholm.

The funds thus collected would be paid by cable in Swedish kroner, or converted to another currency upon direction of the exporter or his bank, when they reached a certain amount or according to a chronological system. That Swedish banks offer such a service reflects their increasing awareness of money management as well as their close ties to large inter national banking correspondents. The availability or applicability of giro systems for foreign currency receipts should be studied on a country by-country basis, as amounts become substantial.