1. A documentary credit (DC) is a payment mechanism in international trade that provides assurance of payment to the seller. It involves banks, buyers, sellers and documents related to the shipment of goods.
2. In a generic DC flow, the buyer opens a DC with their bank after signing a sales contract with the seller. The bank then advises the DC to the seller. After shipping the goods and submitting complying documents to their bank, the seller receives payment.
3. Key terms include letter of credit (LC), commercial credit, documentary credit, advising/confirming bank, issuing bank, beneficiary, applicant, negotiation. The Uniform Customs and Practice (UCP) standardizes LC procedures
,
letter of credit
,
parties involved in lc transaction
,
letter of credit process
,
commercial letter of credit flow
,
advantages of letter of credit
,
risks involved
,
letter of credit
,
parties involved in lc transaction
,
letter of credit process
,
commercial letter of credit flow
,
advantages of letter of credit
,
risks involved
Documentary Credit means any arrangement that is irrevocable and thereby constitutes a definite undertaking of the issuing bank to honour a complying presentation
http://accountsknowledgehub.blogspot.com/
What is a Letter of Credit?
Parties Involved in LC Transaction
Letter of Credit Process
Types of Letter of Credit
Documents of Letter of Credit
Advantages of Letter of Credit
Disadvantages of Letter of Credit
Letter of Credit / LC / Trade Law / What is LC, Letter of Credit/ How LC work...Asif Mohammad ALFAYED
1.What is Letter of Credit and how many Kinds of Letter of Credit are there?
2 . Critically analys The principles of letter of credit including how Letter of Credit Perform in Bangladesh?
Unit 4 Trade Settlement Methods, Export Finance, International Sources of Fi...Charu Rastogi
This presentation covers Trade Settlement Methods, Export Finance, Buyers credit and supplier’s credit, International receivables and cash management, and International Sources of Finance such as ECB, FCCB, ADR, GDR, FDI, Loan Syndication.
International Trade and Inherent Risks
Definition
Need for Trade Finance
Players and stake holders
Elements of Trade Finance
Traditional
Trending
Trade Financing Agencies
Terminology
Inco Terms
Summary
Letter of Credit - Complete Presentation - (Bcom-Mcom-BBA-MBA-BS)Millat Afridi
A letter of credit (LC), also known as a documentary credit or bankers commercial credit, is a payment mechanism used in international trade to provide an economic guarantee from a creditworthy bank to an exporter of goods. A letter of credit is extremely common within international trade and goods delivery, where the reliability of contracting parties cannot be readily and easily determined. Its economic effect is to introduce a bank as underwriting the credit risk of the buyer paying the seller for goods.
A letter of credit, also known as a documentary credit or bankers commercial credit, or letter of undertaking, is a payment mechanism used in international trade to provide an economic guarantee from a creditworthy bank to an exporter of goods. Wikipedia
5. Methods of Payment in International Trade/Export and Import FinanceCharu Rastogi
This presentation discusses methods of obtaining export and import finance such as Accounts Receivable Financing, Factoring (Cross-Border Factoring), Letters of Credit (L/C) Banker’s Acceptance (BA), Working Capital Financing, Medium-Term Capital Goods, Financing (Forfaiting) and Countertrade. It also discusses methods of payment of international trade; Cash in Advance, Letters of Credit, Documentary Collections and Open Account followed by a comparative study of different methods. Furthermore, types of letter of credit and procedure of working of a letter of credit are also discussed.
Documentary Credit means any arrangement that is irrevocable and thereby constitutes a definite undertaking of the issuing bank to honour a complying presentation
http://accountsknowledgehub.blogspot.com/
What is a Letter of Credit?
Parties Involved in LC Transaction
Letter of Credit Process
Types of Letter of Credit
Documents of Letter of Credit
Advantages of Letter of Credit
Disadvantages of Letter of Credit
Letter of Credit / LC / Trade Law / What is LC, Letter of Credit/ How LC work...Asif Mohammad ALFAYED
1.What is Letter of Credit and how many Kinds of Letter of Credit are there?
2 . Critically analys The principles of letter of credit including how Letter of Credit Perform in Bangladesh?
Unit 4 Trade Settlement Methods, Export Finance, International Sources of Fi...Charu Rastogi
This presentation covers Trade Settlement Methods, Export Finance, Buyers credit and supplier’s credit, International receivables and cash management, and International Sources of Finance such as ECB, FCCB, ADR, GDR, FDI, Loan Syndication.
International Trade and Inherent Risks
Definition
Need for Trade Finance
Players and stake holders
Elements of Trade Finance
Traditional
Trending
Trade Financing Agencies
Terminology
Inco Terms
Summary
Letter of Credit - Complete Presentation - (Bcom-Mcom-BBA-MBA-BS)Millat Afridi
A letter of credit (LC), also known as a documentary credit or bankers commercial credit, is a payment mechanism used in international trade to provide an economic guarantee from a creditworthy bank to an exporter of goods. A letter of credit is extremely common within international trade and goods delivery, where the reliability of contracting parties cannot be readily and easily determined. Its economic effect is to introduce a bank as underwriting the credit risk of the buyer paying the seller for goods.
A letter of credit, also known as a documentary credit or bankers commercial credit, or letter of undertaking, is a payment mechanism used in international trade to provide an economic guarantee from a creditworthy bank to an exporter of goods. Wikipedia
5. Methods of Payment in International Trade/Export and Import FinanceCharu Rastogi
This presentation discusses methods of obtaining export and import finance such as Accounts Receivable Financing, Factoring (Cross-Border Factoring), Letters of Credit (L/C) Banker’s Acceptance (BA), Working Capital Financing, Medium-Term Capital Goods, Financing (Forfaiting) and Countertrade. It also discusses methods of payment of international trade; Cash in Advance, Letters of Credit, Documentary Collections and Open Account followed by a comparative study of different methods. Furthermore, types of letter of credit and procedure of working of a letter of credit are also discussed.
New options for transferring money internationally for payments to/from global customers (whether you are the client or the vendor) and how to minimize fees and exchange rate costs in doing so. Helps you assess your own unique needs for this task and how to create a strategic and money-saving approach to this task.
Standby Letter of Credit Definition, Issuance, Notification and usesOscarWason
Another prominent payment technique used in international trade is the Standby Letter of Credit. What is a Standby Letter of Credit (SBLC)? How is it different from a Documentary Letter of Credit? How do issuance and notification of a Standby Letter of Credit work? … Well This article provides the answers to these questions.
What is a Standby Letter of Credit (SBLC)?
The Standby Letter of Credit (SBLC) is a guarantee issued by the importer’s bank, in favor of the exporter, for an amount agreed at the signing of the commercial contract. It provides a guarantee to the exporter that, if due to any circumstances, the importer is unable to pay, then the bank
will make the payment.
Grand City Investment Limited
Email: apply@grandcityinvestment.com
Website: https://grandcityinvestment.com
2. Generic Flow of Documentary Credit
Seller (Beneficiary) Buyer (Applicant)
1. Contract
Goods
5. Shipment/Dispatch 12. Takes Delivery
2. DC Application
11. Settlement
4. Advice of DC
7. Money
10. Documents
6. Documents
8. Documents
9. Reimbursment
3. Documentary Credit (DC)
Advising/Confirming Bank Issuing Bank
3. Definition
A Documentary Credit as an instrument of
settlement of payment obligation between buyer
and seller.
• Letter of Credit : A credit is issued by the
issuing bank and addressed to the Beneficiary
in the form of a ‘Letter’
• Commercial Credit: A credit issued by the
issuing bank in settlement of a commercial
transaction
4. Definition of DC
• Documentary Credit : A Credit is issued by the
issuing bank and requires the presentation of
stipulated documents for compliance
• Standby Letter of Credit: A credit is issued by
the issuing bank to be used for settlement
only where there has been some form of
default or financial guarantee.
5. Roles of Letter of Credit (LC)
Counterparts of a trade are usually located
overseas. Sellers (exporters) and buyers
(importers) have the following concerns when
signing a trade contract:
• Exporter/Seller: What if we ship the goods to
the importer but they don’t pay us the
proceeds?
• Importer/Buyer: What if we are forced to pay
the proceeds but the goods do not arrive?
6. Role of LC
An L/C is a letter issued by a bank to guarantee
the payment of proceeds. The bank, which
issued an L/C, guarantees that the proceeds will
be paid even if the importer goes bankrupt or is
unable to pay for any other reason, on the
condition that the documents satisfying certain
conditions (terms of L/C) are presented.
7. Roles of LC
1. Supplementation of credit of the buyer
(importer) L/Cs make it easier for buyers to
gain trust from sellers in selling their
products.
2. Convenient tool for the seller (exporter)
Sellers will have opportunities to receive
finance for the proceeds from the bank
easily, in the form of negotiation of export
bills.
8. What You Should Know About LC
• U.C.P.600, Uniform Customs and Practice for
Documentary Credits 2007 Revision (UCP 600)
has been established by the International
Chamber of Commerce (ICC), to standardize
interpretations and procedures of L/Cs.
Majority of L/Cs are subject to rules of the UCP.
• L/C transactions entirely based on the
presentation of documents
9. What You Should Know About LC
• Transactions with L/Cs are separate and
independent from export contracts that are
the background of the L/Cs. They are entirely
based on the presentation of documents.
• Therefore, banks issuing L/Cs must pay the
proceeds as written in the L/C so long as the
documents fulfilling the terms and conditions
of the L/C are presented, even if the goods or
their shipment violate the export contract
10. Ilustrasi Jurnal – SIGHT LC
TGL Issuing Bank Advising Bank
2 Feb No Entry
10 Feb N/A N/A Shipment
11 Feb No Entry
Presentation of Documents
Notify the customers
11. Ilustrasi Jurnal – SIGHT LC
TGL Issuing Bank Advising Bank
14 Feb No Entry
13. 1. Drawer (ABC Company Ltd.: the customer, negotiation applicant)
2. Amount (US$55,800.00: amount requested for negotiation together with currency indication; within
the unused balance of the L/C, usually in agreement with the invoice amount)
3. Drawee, place of payment (HIJ BANK, New York: the payer and the place of payment of the amount of
the bill indicated in the L/C
4. Maturity (30 DAYS AFTER SIGHT: as required in the L/C)
5. Payee (BTMU: negotiating bank of the bill)
6. Date and place of issue (OCTOBER 10, 2008, TOKYO)
7. Issuing bank of the L/C, L/C No., date of issue (HIJ BANK, New York; HIJLC1234567890; April 10, 2008)
8. Applicant of the L/C (XYZ Corporation New York: payer of the import proceeds)
14. Ilustrasi Jurnal – USANCE LC
TGL Issuing Bank Advising Bank
2 Feb No Entry
10 Feb N/A N/A Shipment
11 Feb No Entry
Presentation of Documents
Notify the importer
Akseptasi notify advising
bank
15. Ilustrasi Jurnal – USANCE LC
TGL Issuing Bank Advising Bank
14 Feb No Entry