Repayment Source

Repayment Source is a core term in foreign trade financing, referring to the origin of funds used by a borrower (such as an importer or exporter) to repay trade financing. Under settlement methods such as letters of credit, documentary collections, and open account, when banks or financial institutions provide financing, the repayment source must be clearly identified, typically including: proceeds from the importer's downstream sales of goods, payment received by the exporter from an overseas buyer, or other operating income of the borrower. It is commonly used in trade financing agreements such as export negotiation, import negotiation, packing loans, and forfaiting. Note: The repayment source must be genuine, legal, and traceable, and should match the trade background; if the source is payment from an overseas buyer, foreign exchange controls and exchange rate risks should be considered. Unlike 'repayment method,' repayment source emphasizes where the funds come from, while repayment method emphasizes how repayment is made (e.g., telegraphic transfer, deduction). It also differs from 'guarantee,' as a guarantee is a secondary repayment source, whereas the repayment source is the primary repayment source.