Cut

In foreign trade, 'Cut' typically refers to a 'price reduction' or 'deduction' arrangement in a letter of credit or documents, where the buyer directly deducts a portion of the payment according to an agreed percentage or amount when paying for goods. It is commonly used for commissions, discounts, quality compensation, or advance payment offsets. Usage scenarios include: a letter of credit stipulating that 'X% of the invoice amount shall be deducted by the buyer at the time of payment as a cut,' or a contract between buyer and seller agreeing that '2% of the invoice amount per shipment shall be taken as a cut.' Precautions: The cut must be explicitly agreed upon in the contract or letter of credit in advance, otherwise the bank may refuse payment; the cut amount is usually calculated based on the invoice amount, and attention should be paid to whether freight, insurance, etc. are included; a cut differs from 'commission' and 'discount'—commission is remuneration paid by the seller to an intermediary, discount is a price concession, while a cut is a direct deduction by the buyer at the time of payment, belonging to a payment arrangement. It also differs from 'set-off': a cut is a unilateral deduction, while set-off is the offsetting of mutual debts. Foreign trade practitioners need to accurately reflect the cut amount in documents to avoid payment collection risks.