Progress Report - UKG Analyst Summit 2024 - A lot to do - Good Progress1-1.pdf
Purpose Of Lease BG SBLC
1.
2.
3. The lease BG SBLC is a type of letter of credit
that serves as a guarantee to the seller in a
commercial agreement.
In this sense, it is not a means of payment
directly, but it is a guarantee of payment
against non-payment by the importer.
When this bank instrument is used, the initial
treatment is that once the conditions of the
agreement have been fulfilled, the importer or
buyer makes the payment for the
merchandise. However, if there is a setback to
4.
5. In this way, the exporter is covered by the
possibility of non-payment. Likewise, the
importer can agree with the bank on a more
flexible form of payment.
Characteristics of standby lease BG SBLC
The standby letter of credit allows the exporter
or seller to have a guarantee in their commercial
operations. This is in case the importer or buyer
does not comply with the obligations acquired in
the commercial agreement. Therefore, it does
not constitute a means of payment.
The obligations included in an agreement with
this type of letter of credit can be commercial,
6.
7. Differences between the common letter of credit
and the standby
The fundamental difference between the two letters of
credit is that the common one acts as a means of
payment and the standby one acts as a guarantee. In
the first, once the parties have complied with the
agreement, the issuing bank takes charge of the
payment. In the second, the letter of credit is executed
only if the importer or buyer fails to fulfill his obligations
and the seller or exporter complied.
Also, in the common or normal, the parties are obliged
to deliver more rigid documentation to enforce the
agreement. Meanwhile, the standby is more flexible
since it only represents a guarantee in case of non-
compliance.
8.
9. General considerations of the standby letter of
credit
The purpose of this bank instrument is to serve as a
guarantee in a commercial agreement. Therefore,
there are aspects to be taken into account by the
seller such as the amount of coverage and expiration
date. First, the seller makes sure that he receives full
payment for his products or services from him.
Second, the due date guarantees a deadline to
receive the corresponding payment, either by the
buyer or the issuing bank. Automated collection is an
important advantage despite the violation of the
contract.
Finally, it is necessary to clarify the documents
