EXPORTERS HANDBOOK

PAYMENT OPTIONS DOCUMENTARY COLLECTIONS LETTERS OF CREDIT INCOTERMS EXPORT FINANCE

BANK OF THE WEST

Exporters Handbook
This information is supplied for educational purposes only, and should not be relied on for any specific transactions. This material is not a complete discussion of the practices, customs, policies or procedures of Bank of the West or any other party, nor of any law, regulation, or rule of any government or trade association. This material was believed to be accurate at the time of preparation. Laws and the processes they affect change over time. Bank of the West is not a tax or legal advisor. Please consult your tax or legal advisor regarding the tax or legal impact of any law, regulation, document or transaction. See the additional Terms and Conditions https://www.bankofthewest.com/privacy-security/terms-conditions.html
Member FDIC Loans and other products are subject to credit approval. Equal Housing Lender

BANK OF THE WEST GLOBAL TRADE SERVICES 1977 SATURN ST. (SC-MPK-02-G) MONTEREY PARK, CA 91755 888-600 TRADE (8723)

August 2010
Form ID: 075-05325

BANK OF THE WEST Exporters Handbook Table of Contents

Topic ......................................................................................................................................... Page International Services ................................................................................................................. 1 Determining Payment Terms & Comparing Payment Terms.................................................... 3 Foreign Credit Checking ............................................................................................................. 4 Incoming International Wire Transfers (Foreign Drafts) ............................................................ 5 Documentary Collection.............................................................................................................. 6 D/P vs. D/A.................................................................................................................................. 8 Export Letter of Credit................................................................................................................. 9 Export Letter of Credit Communication, Payment and UCP 600........................................... 11 Example of Export Letters of Credit Sight in Swift Format ...................................................................................................... 13 Usance in Swift Format - Paid at Sight .......................................................................... 14 Deferred Payment in Swift Format................................................................................. 15 Deferred Payment Usance in Swift Format and Shipped Ex-Works.......................... 16 Export Quotation Sheet .............................................................................................................. 18 Sight Export Letter of Credit Instructions to Buyer..................................................................... 19 Usance (Time) Export Letter of Credit Instructions to Buyer..................................................... 21 Export Letter of Credit Checklist................................................................................................. 23 Drafts Under Export Letters of Credit ......................................................................................... 25 Sample Drafts .................................................................................................................27 Transport Documents ................................................................................................................. 32 Ocean Bill of Lading Example........................................................................................ 34 Air Waybill Example........................................................................................................ 35 Export Documents ...................................................................................................................... 36 Export Letters of Credit - Payment and Discrepancies.............................................................. 39 Fees Charged on Export Letters of Credit` ................................................................................ 45 Export Letters of Credit as Loan Collateral.............................................................................. 48 Choosing a Freight Forwarder.................................................................................................... 50 International Commercial Terms (INCOTERMS) ...................................................................... 51 Financing Foreign Sales - The Export Usance Letter of Credit................................................. 53 Letters of Credit - Advised vs. Confirmed .................................................................................. 55 Authorizations to Pay (Assignment of Proceeds).................................................................... 56 Transferable Letters of Credit..................................................................................................... 57 Standby Letters of Credit ............................................................................................................ 59 Standby Letters of Credit Procedures ........................................................................................ 61 Export Financing Assistance............................................................................................... 63

BANK OF THE WEST

INTERNATIONAL SERVICES
Bank of the West serves middle-market companies in the western United States, bringing the international resources of its parent, BNP Paribas, to its customers. BNP Paribas is one of the largest banks in the world and has an extensive overseas network. At Bank of the West, the Global Trade Services team offers advice on a wide range of trade finance products to assist our customers importing and exporting activities.

GLOBAL TRADE SERVICES 1(888) 600-TRADE

IMPORT SERVICES Bank of the West Trade/Import L/C, a web-based product which allows our customers to issue and track letters of credit directly from their files in Global Trade Services. Advice on the terms and conditions of an import letter of credit and the rules governing those letters of credit, the Uniform Customs and Practice for Documentary Credits (2007 Revision), International Chamber of Commerce Publication No. 600 (UCP 600). Advice on structuring a line of credit for import letters of credit and related financing. Advice on import documentary collections as an alternative to letters of credit. Advice on bankers acceptances arising from usance letters of credit. Using bankers acceptances to finance payments under sight letters of credit.

EXPORT SERVICES Structuring export letters of credit to enhance timeliness of payment. Advices on export documentary collections as an alternative to export letters of credit. Advice on using the export usance letter of credit to extend terms to overseas buyers. Advice on the usefulness of a confirmation of an export letter of credit. Bank of the West/DCL (Export Direct Collection Letter), a web-based product which allows customers to process their export collections directly to the buyers bank, speeding receipt of funds.

EXPORT FINANCING SERVICES Pre-export financing to provide working capital for exporters under 90% guarantee from Ex-Im Bank. Lending against eligible foreign receivables, which are covered by foreign credit insurance. Providing medium-term financing to overseas buyers of U.S. exports under either an Ex-Im Bank insurance policy or guarantee. (1)

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BANK OF THE WEST

STANDBY LETTERS OF CREDIT Advice on the wording for standby letters of credit issued for our customers covering: unpaid invoices; backing of credit facilities to related parties; bids and performance on overseas contracts. Advice on the wording for standby letters of credit received in favor of our customers or in the banks favor to provide security for the bank extending a credit facility.

If you need general advice about letters of credit/collections or import/export finance, we encourage you to contact us by calling toll-free at 1 (888) 600-TRADE. Our address and communication references for international transactions are:

Bank of the West Global Trade Services SC-MPK-02-G 1977 Saturn Street Monterey Park, CA 91755 SWIFT: BWSTUS66 LAX

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BANK OF THE WEST

DETERMINING PAYMENT TERMS

CASH IN ADVANCE RELATIONSHIP TYPE OF GOODS POLITICAL ECONOMIC TIMING OF CASH FLOW AND DELIVERY NEW CUSTOM-MADE UNSTABLE UNSTABLE YES LETTER OF CREDIT NEW CUSTOM-MADE UNSTABLE* UNSTABLE* YES DOCUMENTARY COLLECTION WELL ESTABLISHED STOCK ITEMS STABLE STABLE NO OPEN ACCOUNT WELL ESTABLISHED STOCK ITEMS STRONG STRONG NO

CONFIRMATION BY U.S. OR OTHER MAJOR BANK SUGGESTED WHAT METHOD OF PAYMENT SHOULD BE USED? DEPENDS ON EVALUATION OF RISK. COUNTRY RISK: POLITICAL STABILITY EXCHANGE RESTRICTIONS

CUSTOMER RISK: FINANCIAL STRENGTH CREDIT RATING RELIABILITY

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BANK OF THE WEST COMPARING PAYMENT TERMS

METHOD OF PAYMENT CASH IN ADVANCE SIGHT L/C TIMING OF PAYMENT Before shipment Presentation of documents after shipment GOODS AVAILABILITY At destination arrival When L/C is paid None Minimal, Issuing/confirming bank obligation to pay if documents conform to L/C Minimal, bank obligation to pay if documents conform to L/C terms Non-payment of draft SELLER'S RISK BUYER'S RISK !00% reliance on seller Assurance of shipment, but depends on seller to supply goods ordered Regardless of product quality, payment due at B/A maturity Assurance of shipment, but depends on seller to supply goods ordered Minimal, may refuse to pay draft at maturity

USANCE (TIME) L/C

Maturity of B/A or at discount of the draft

At acceptance of draft drawn under the L/C

D/P COLLECTION*

When documents received at the presenting bank When accepted Trade Draft matures

When payment is made

D/A COLLECTION**

At time Trade Draft is accepted

Non-payment of draft, even though buyer has the merchandise 100% reliance on buyer

OPEN ACCOUNT

Buyer's discretion

Upon arrival

None

* Also known as: Documents against Payment, Cash against Documents (CAD), and Sight Draft ** Also known as: Documents against Acceptance, Time Draft and Trade Acceptance. Note: With Letters of Credit and Collections, banks deal only with documents, not with the merchandise.

Resources for foreign credit checking may be found at http://www.creditworthy.com/providers/agency.asp (4)

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BANK OF THE WEST INCOMING INTERNATIONAL WIRE TRANSFERS & FOREIGN DRAFTS
Incoming International Wire Transfers If you are an exporter selling on open account or prepaid terms, you should instruct your buyer to send the wire transfer to Bank of the West, ABA# 121100782 with the following instructions: Name of your company Account Number at Bank of the West Name of Bank of the West branch where your account is domiciled Please note that the wire transfer should be directed to Bank of the West. Foreign banks typically send their U.S. dollar wire transfers to one designated U.S. correspondent bank for this purpose, where they can concentrate balances and ease their reconcilement work. This U.S. correspondent bank in turn sends the money to its final destination by a wire transfer through the Federal Reserve. Thus, the foreign bank does not need a direct correspondent bank relationship with Bank of the West to effect a wire transfer. The Global Trade Services (GTS) staff is not responsible for wire transfers coming in directly to your account. Questions about incoming wires going directly to your account should be directed to your local branch or cash management service staff; alternatively, you can subscribe to cash management balance reporting services. Foreign Drafts If you are an exporter selling merchandise for small dollar amounts on an open account basis and the buyer is sending you a check in dollars drawn on a non-U.S. or non-Canadian bank, insist that your buyer purchase a foreign draft (i.e. check) for the prescribed dollar amount from its local bank. Since this foreign draft expressed in dollars will be drawn on a U.S. bank, you can deposit it in your bank account with us and it will clear through the U.S. check clearing system. If your buyer sends you a U.S. dollar check drawn, for example, on its bank in Italy, you will have to use our Collections Department to send this item back to Italy for collection, which will be a time consuming and costly process.

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BANK OF THE WEST DOCUMENTARY COLLECTION

WHAT IS A DOCUMENTARY COLLECTION?
This payment mechanism is the collection by a bank of funds due from a buyer against the delivery of documents. The bank, acting as agent for the seller (exporter), presents documents to the buyer (importer) through that party's bank and in exchange receives payment of the amount owed, or obtains acceptance of a time draft for payment at a future date. The liability of the bank under a documentary collection is primarily restricted to following the seller's instructions in forwarding and releasing documents against payment or acceptance.

HOW IS A COLLECTION DIFFERENT FROM AN L/C OR OPEN ACCOUNT?

Unlike a letter of credit, the bank does not assume any liability to pay if the buyer does not want or is unable to pay. Compared to open account sales, the documentary collection offers more security to the seller, but less than a letter of credit.

WHEN SHOULD A DOCUMENTARY COLLECTION BE USED?

Numerous criteria are applied by businesses when determining which payment instrument to offer as a term of sale. However, in general, a documentary collection may be appropriate where: The seller and the buyer know each other to be reliable There is no doubt about the buyer's willingness or ability to pay The political and economic conditions of the buyer's country are stable The importer's country does not have restrictive foreign exchange controls

WHAT ARE THE ADVANTAGES OF A DOCUMENTARY COLLECTION?

Simple and inexpensive handling compared to letters of credit Often faster receipt of payment than open account terms Seller retains title to the goods until payment or acceptance is made

ARE THERE ANY DISADVANTAGES?

If the buyer refuses or is unable to pay, the seller has three options, which could be expensive: Find another buyer Pay for return transportation Abandon the merchandise

WHO ARE THE PARTIES INVOLVED?

PRINCIPAL - exporter, seller, remitter, drawer of the draft REMITTING BANK - exporter's bank handling the collection PRESENTING OR COLLECTING BANK - usually the buyer's Bank of the West DRAWEE - importer, buyer, payee

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BANK OF THE WEST

WHAT TYPES OF DOCUMENTARY COLLECTIONS ARE THERE?
.Documents against Payment (D/P) also known as "Sight Draft" or "Cash against Documents (CAD). The buyer must pay before the collecting bank releases the title documents Documents against Acceptance (D/A). The buyer accepts a time draft, promising to pay for the goods at a future date. After acceptance, the title documents are released to the buyer.

WHAT IF SHIPMENT IS BY AIR FREIGHT?

An Air Waybill (AWB) is a straight consignment; it is not negotiable. The buyer does not need the AWB to pick up the goods. In other words, he can obtain the merchandise without paying for it. To avoid this possibility, when shipping by air, it is recommended that the AWB be consigned to the buyer's bank. This prevents release of the merchandise until such time as the buyer's bank issues an Air Release to the carrier. This is done only after the buyer has made payment or accepted the draft.

WHAT ARE THE STEPS IN A DOCUMENTARY COLLECTION?

1. The buyer (importer) and seller (exporter) agree on the terms of sale, shipping dates, etc., and that payment will be made on a documentary collection basis. 2. The exporter, through a freight forwarder, arranges for the delivery of goods to the port/airport of departure. 3. The forwarder delivers the goods to the point of departure and prepares the necessary documentation based on instructions received from the exporter. 4. Export documents and instructions are delivered to the exporter's bank by either the exporter or the freight forwarder. 5. Following the instructions of the exporter, the bank processes the documents and forwards them to the buyer's bank. 6. The buyer's bank, on receipt of documents, contacts the buyer and requests payment or acceptance of the trade draft. 7. After payment or acceptance of the draft, documents are released to the buyer, who utilizes them to pick up the merchandise. 8. The buyer's bank remits funds to the seller's bank or advises that the draft has been accepted. 9. On receipt of good funds, seller's bank credits the account of the exporter.

WHAT IS THE URC 522?

URC 522 stands for The Uniform Rules for Collections, 1995 Revision, International Chamber of Commerce Publication No. 522, the rules that banks apply to the handling of collections. Any company importing or exporting on a documentary collection basis should be familiar with the URC 522, as it has a direct impact on how the collection is handled and what procedures the banks follow. The URC 522 may be ordered from ICC Business Bookstore USA, 1212 Avenue of the Americas, New York, NY 10036 (212) 703-5066 www.iccbooksusa.com. (7)

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BANK OF THE WEST

DOCUMENTARY COLLECTIONS D/P VS D/A
COLLECTION PAYMENT OCEAN CONTROL NEGOTIABLE RISK NON-NEGOTIABLE BUYER ACCEPTS SHIPMENT AND DOESN'T PAY AT DRAFT MATURITY D/P AT SIGHT AIR D/A AT DRAFT MATURITY DOCUMENTS TO BUYER ON PROMISE TO PAY

BUYER REFUSES SHIPMENT

IF THE AIR WAYBILL IS CONSIGNED TO BUYER, MERCHANDISE MAY BE PICKED UP WITHOUT RELEASE FROM BANK. AND NEITHER THE SELLER OR BANK CONTROL RELEASE OF THE MERCHANDISE. COLLECTIONS ARE GOVERNED BY THE UNIFORM RULES FOR COLLECTIONS, I.C.C. PUBLICATION NO. 522

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BANK OF THE WEST EXPORT LETTER OF CREDIT

WHAT IS AN EXPORT LETTER OF CREDIT?
It all depends on your point of view. From the seller's (beneficiary's) perspective, a commercial letter of credit from a foreign country is an export credit. To the buyer (applicant), the same letter of credit is an import credit. An export credit is a conditional payment mechanism whereby the issuing bank irrevocably promises to pay the seller, if presented documents comply with all of the L/Cs terms and conditions. As the issuing bank's undertaking is conditional, a commercial letter of credit is not a guarantee of payment.

HOW IS THE EXPORT L/C PROCESS INITIATED?

Once the buyer (importer) and the seller (exporter) agree on price and terms of sale, the importer arranges for its bank to open an irrevocable letter of credit. The buyer's bank prepares a letter of credit based on instructions from the buyer, which are in agreement with the previously arranged terms of sale. The buyer's bank sends the letter of credit by either wire or mail to its U.S. correspondent bank. The exporter may request that a specific U.S. bank be the advising bank, such as Bank of the West or if no advising bank is requested, the issuing bank will select one of its correspondents.

WHAT IS THE ADVISING BANK'S ROLE?

The U.S. advising bank verifies the authenticity of the letter of credit, prepares a cover letter containing presentation instructions, and forwards the L/C to the exporter (beneficiary). The advising bank has no obligation to pay. Unless the advising bank has added its confirmation to the L/C, it will pay the beneficiary only after it has received good funds from the issuing bank. The letter of credit should be advised to the International Department of the exporters bank, not to the exporters local bank branch. Local bank branches do not have the ability to authenticate letters of credit from overseas.

WHAT ARE THE BENEFICIARY'S RESPONSIBILITIES?

The beneficiary reviews the letter of credit to make sure it conforms to all of the terms of sale and that all requirements, such as latest shipping date, can be met. If the exporter cannot comply with any of the credit terms, the buyer is contacted directly and an amendment is requested. The advising bank has no responsibility in the amendment process except to forward received amendments to the beneficiary after verifying their authenticity. The exporter contacts a freight forwarder to arrange delivery of the merchandise to the port/airport of departure. The goods are delivered to the departure point and the forwarder prepares the necessary documentation in compliance with the L/C terms and conditions. Either the exporter or the forwarder presents complying documents and the original letter of credit to the advising bank.

WHAT IS "NEGOTIATION"?
The U.S. bank reviews the documents for compliance with the letter of credit terms and conditions. If found to be in order, they are forwarded to the foreign bank for review and transmission to the buyer. If the documents are not in compliance with all the terms and conditions of the letter of credit, the bank can act only in the following ways: (9)

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BANK OF THE WEST

a. Return the documents to the exporter for correction, if possible, and time permitting. b. Send the documents to the issuing bank on an approval basis. c. Cable the issuing bank for authority to pay. d. Accept an indemnity from the exporter covering discrepancies. This is an extension of credit. e. Pay under reserve with recourse to the exporter if buyer refuses documents. This is also an extension of credit. f. Return the documents to the seller for their disposition.

HOW LONG DOES IT TAKE FOR THE EXPORTER TO GET PAID?

The timeliness of payment to the exporter is dependent on the reimbursement instructions in the letter of credit. Unless the credit has been confirmed, the U.S. bank is under no obligation to pay. It will pay only after receiving funds from the issuing bank. Listed below are the three methods of settlement from fastest to slowest. The issuing bank determines the settlement method, though it is always appropriate to request the L/C be payable in the USA per either a or b below. a. Negotiating bank is authorized to debit issuing bank's "DUE TO" account. b. Negotiating bank is authorized to claim reimbursement from the issuing bank's U.S. correspondent/settling agent. c. Documents are payable at the counters of the issuing bank and must be forwarded to them. After examining the documents, the issuing bank remits payment.

WHAT IS THE UCP 600?

The Uniform Customs and Practice for Documentary Credits, 2007 Revision, International Chamber of Commerce Publication No. 600 is the set of rules that banks apply to the handling of documentary letters of credit. Any company using letters of credit for importing or exporting should be familiar with the UCP 600 as it has a direct impact on how the letter of credit is handled and what procedures the banks will follow. The UCP 600 may be ordered from ICC Business Bookstore USA, 1212 Avenue of the Americas, New York, NY 10036 (212) 703-5066 www.iccbooksusa.com .

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BANK OF THE WEST

EXPORT LETTERS OF CREDIT
COMMUNICATION AND PAYMENT
Letters of credit in favor of exporters in the United States are usually sent by SWIFT and in a prescribed format. A SWIFT format indicates the issuing bank at the top (received from) and has numbers at the left for specific information such as:
MT700: Issue of a Documentary Credit Received: XX/XX//2008 From Institution 40A: Form of Documentary Credit 20: Documentary Credit Number 31C: Date of Issue 40E: Applicable Rules (UCP 600 or ISP98 if a standby letter of credit) 31D: Date and Place of Expiry 50: Applicant (Buyer) 59: Beneficiary (Seller) 32B: Currency Code, Amount (U.S. Dollars or foreign currency) 39A: Percentage (variance if any allowed for amount) 41A: Available With (Nominated Bank Name) By (Sight Payment, Deferred Payment, Acceptance, or Negotiation) 43P: Partial Shipments (Allowed or not allowed) 43T: Transshipment (Allowed of not allowed) 44E: Port of Loading/Airport of Departure 44F: Port of Discharge/Airport of Destination 44C: Latest Date of Shipment 45A: Description of Goods and/or Services (Goods being shipped and applicable INCOTERM) 46A: Documents Required 47A: Additional Conditions 71B: Charges (Who pays bank charges outside the issuing banks country? Customary practice is for seller to pay their banks charges.) 48: Period for Presentation (If silent, 21 days max after shipment date) 49: Confirmation Instructions (A request, a credit consideration for the Confirming Bank) 53A: Reimbursement Bank (Issuing Banks U.S. Correspondent which will act as reimbursing bank) 78: Instructions to the Paying/Accepting/Negotiating Bank (Instructions to the Advising Bank: includes information on where and how documents are to be sent, charges for discrepancies, etc.)

SWIFT stands for Society for Worldwide Interbank Financial Telecommunication and is a bank group which has set up global standards for sending and receiving authenticated instructions for wire transfers and letters of credit. SWIFT is increasingly replacing the tested telex. Some letters of credit are sent by tested telex, and these usually are in a free format without the numbered designations at the left. Banks around the world have set up authentication arrangements with each other on a telex and SWIFT basis. This is the basic level of a correspondent banking relationship to allow the sending of letters of credit and payment under these letters of credit.

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BANK OF THE WEST

Most foreign banks have cut back on the number of accounts maintained in the United States to eliminate idle balances and reduce the cost of reconcilement of numerous unnecessary accounts. Foreign banks are increasingly maintaining specialized dollar accounts at selected banks to handle specific kinds of transactions: L/C reimbursement account; foreign exchange clearing account; wire transfer payment account; and cash letter (check clearing) account. By setting up specialized accounts for specific kinds of transactions, the foreign banks have greatly simplified their reconcilement process and their ability to control these accounts. Presenting conforming documents, specifying that the L/C is available by negotiation, and reimbursement instructions are all important considerations for an exporter being paid on a timely basis. Instructions in a letter of credit may call for the documents to be sent back to the issuing bank for a final examination before allowing payment to be made. For example, when U.S. banks issue letters of credit, they may require documents to be sent back to the U.S. bank for a final examination before payment is made (available by payment with issuing bank - see 41.A on the SWIFT). Many export letters of credit in favor of U.S. beneficiaries are available by negotiation and allow for TT (tested teletransmission) reimbursement which is done by an authenticated SWIFT message. If the U.S. bank examining the documents for strict compliance to the terms of the letter of credit per the UCP 600 finds no discrepancies, the U.S. bank can request reimbursement from the issuing banks U.S. correspondent for this purpose (often the issuing banks New York or Los Angeles branch). Since payment is made before the issuing bank sees the documents, this method of payment is more risky and in many instances the issuing bank will not authorize TT reimbursement. For example, if payment is made to the beneficiary under TT reimbursement and the issuing bank later does find discrepancies in the documents, the issuing bank can require that the U.S. paying bank return the money (if the importer does not waive the discrepancies). If the export letter of credit does not allow for TT reimbursement and documents are sent back to the issuing bank with drafts to its U.S. reimbursing bank, the examination process at the issuing bank may slow down the payment process. The exporters documents may sit in a stack waiting to be examined and when they are examined, discrepancies may be found which necessitates calling the importer for permission to waive the discrepancies. This waiver may not be made immediately which will also slow down the payment process. Exporters often mistakenly believe that requesting the advising bank to confirm the letter of credit will speed up their payment. However, a confirmation by a U.S. bank is a promise to pay by the U.S. bank in the event the issuing bank does not make payment under the letter of credit when clean (i.e. no discrepancies) documents are presented. Thus, the confirmation typically protects the exporter against the issuing bank failing to pay because the issuing bank is bankrupt or adverse economic circumstances have occurred (such as foreign exchange controls). For usance letters of credit where the drafts are drawn on a U.S. reimbursing bank, once the drafts have been accepted by the U.S. bank, the exporter has the credit risk of the U.S. bank. Thus, if an exporter requests a confirmation on a usance letter of credit where the drafts are drawn on a U.S. bank, the confirmation is basically protecting the exporter during the period from the date of issuance on the letter of credit to the date when the time draft is accepted by the U.S. bank. If the time draft were drawn on the issuing bank, the confirmation would still protect the exporter during the acceptance period.

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BANK OF THE WEST EXAMPLE OF SIGHT EXPORT L/C IN SWIFT FORMAT

RECEIVED FROM: :31C :40E :31D :50 :59 :32B :39A :41A :42C :42A :43P :43T :44A :44B :44C :45A :crdt issued applicable rules :expiry :ord customer JAPANESE BANK, LTD., TOKYO :081225 :UCP600 :090615 COUNTERS OF NEGOTIATING BANK :TOKYO MEAT CO., LTD. 2-24-80, HORIKARA, TOKYO :ben customer :CALIFORNIA BEEF, INC. 1412 FLANK STREET LOS ANGELES, CA 91107 :currency amount :USD 70822.50 :amount spec :5/5 :available with :ANY BANK :by NEGOTIATION :drafts :SIGHT FOR FULL INVOICE COST :drawee :BISHUS6L :part shipment :PROHIBITED :transshipment :PROHIBITED :ship-disp-take :U.S. PORT :ship-dispatch-to :TOKYO, JAPAN :latest ship date :090606 :shipment of :9,950 LBS (5 PCT MORE OR LESS ALLOWED) OF FROZEN BEEF FLAP STEAK AT USD3.55 PER LB AND 10,000 LBS (5 PCT MORE OR LESS ALLOWED) OF FROZEN DICED BEEF AT USD3.55 PER LB CANDF JAPAN :docmt required :+SIGNED COMMERCIAL INVOICE IN 3 :2/3 SET OF CLEAN ON BOARD BILLS OF LADING MADE OUT TO THE ORDER OF SHIPPER AND BLANK ENDORSED MARKED FREIGHT PREPAID NOTIFY APPLICANT. +PACKING LIST IN 3 +USDA FSIS FORM 9060-5 AND 9290-1 EACH IN 1 COPY :addtnl cond :ONE SET OF NON-NEGOTIABLE DOCUMENTS INCLUDING 1/3 ORIGINAL BILL OF LADING AND THE ORIGINAL OF USDA FSIS FORM 9060-5 AND 9290-1 TO BE AIRMAILED DIRECTLY TO TOKYO MEAT CO., LTD. IMMEDIATELY AFTER SHIPMENT AND BENEFICIARY'S CERTIFICATE TO THIS EFFECT IS REQUIRED. :presentation :WITHIN 15 DAYS AFTER DATE OF SHIPMENT BUT WITHIN VALIDITY OF CREDIT :confrmtn instr :WITHOUT :senders corr :[SWIFT], JAPANESE BANK, LTD., LOS ANGELES BRANCH, LA, CA :instr to bank :REIMBURSEMENT BY TELECOMMUNICATION IS PROHIBITED ALL THE DOCUMENTS MUST BE FORWARDED US, I.E. THE JAPANESE BANK LTD. 5 MARUNOUCHI, 3-CHOME, CHIYODA-KU, TOKYO JAPAN BY REGISTERED AIRMAIL(S) IN 1. THE DRAFTS MUST BE PRESENTED TO THE DRAWEE BANK, ATTN: L/C REIMBURSEMENT DEPT. FOR REIMBURSEMENT CLAIMS. :acct with bank :BANK OF THE WEST TORRANCE BRANCH :bk to bk info :THIS CREDIT IS ISSUED SUBJECT TO UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (2007 REVISION) ICC PUBLICATION NO.600.

:46A

:47B

:48 :49 :53A :78

57D :72

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BANK OF THE WEST

EXAMPLE OF USANCE L/C IN SWIFT FORMAT/PAID AT SIGHT

RECEIVED FROM: :31C :40E :31D :50 :credit issued applicable rules :expiry :ord customer PEOPLES NATIONAL BANK - SEOUL, KOREA :080423 :UCP600 :010221 AT THE NEGO BANK :SOUL MAN MARKETING CO., LTD. RM 100 HANIL BLDG. 18-KA, CHUNG-KU, SEOUL KOREA :ben customer :DHARMA TRADING, INC. P.O. BOX 60, SAN FRANCISCO CA 94120, USA :currency amount :USD 100,000 :available with :ANY BANK :by :NEGOTIATION :drafts :90 DAYS AFTER SIGHT :drawee :BWSTUS66LAX :part shipment :ALLOWED :trans shipment :PROHIBITED :ship-disp-take :US PORT :ship-dispatch to- :BUSAN PORT, KOREA :ship-dispatch to :080510 :shipment of :SHIPMENT OF 10,200 T-SHIRTS F.O.B. ANY U.S.A. PORT :docmt required :+SIGNED COMMERCIAL INVOICE IN 3 COPIES +SIGNED PACKING LIST IN 3 COPIES +FULL SET OF CLEAN ON BOARD OCEAN B/L MADE OUT TO ORDER AND BLANK ENDORSED MARKED FREIGHT COLLECT, NOTIFY APPLICANT :charges for :ALL BANKING CHARGES AND COMMISSIONS INCLUDING REIMBURSEMENT CHARGES OUTSIDE KOREA ARE FOR ACCOUNT OF BENEFICIARY :presentation :WITHIN 20 DAYS AFTER THE DATE OF SHIPMENT BUT WITHIN VALIDITY OF THE CREDIT :confrmtn instr :WITHOUT :senders corr :BWSTUS66LAX BANK OF THE WEST LOS ANGELES, CA :instr to bank :ALL DOCS MUST BE MAILED TO PEOPLES NATIONAL BANK, FOREIGN BUSINESS DEPT. 8, 3-GA, NAMDAEMUN, CHUNG-KU SEOUL, KOREA BY COURIER IN ONE LOT. CREDIT IS TO BE NEGOTIATED AT SIGHT BASIS, WITH THE ACCEPTANCE COMMISSION AND DISCOUNT CHARGES FOR ACCOUNT OF BENEFICIARY. :bk to bk info : THIS IS OPERATIVE INSTRUMENT. THIS CREDIT IS SUBJECT TO UCP(2007REV) I.C.C. PUB 600

:59

:32B :41D :42C :42A :43P :43T :44A :44B :44C :45A :46A

:71B :48 :49 :53A

:78

:72

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BANK OF THE WEST EXAMPLE OF SIGHT DEFERRED PAYMENT L/C IN SWIFT FORMAT
RECEIVED FROM: BANCO AMERICANO, S.A. :40A :31C :40E :31D :51A :50 :form of d/c :crdt issued applicable rules :expiry :appl bnk :ord customer :IRREVOCABLE :081004 :UCP600 :081231 LOS ANGELES, CA :BANCO AMERICANO GRANADA SPAIN :MARIO COMMA, S.A. BARRIO DE DORMIR NO. 92 VIZCAYA, SPAIN :SUMP PUMPS, INC. 43 ROMAN STREET OAKLAND, CA USA :USD 105000 :MAXIMUM :BWSTUS66LAX : DEF PAYMENT :120 DAY AFTER BILL OF LADING DATE :ALLOWED :NOT ALLOWED :ANY USA AIRPORT :MADRID-BARAJAS AIRPORT, SPAIN :CIF-MADRID: 45 SUMP PUMPS. STRICTLY IN ACCORDANCE WITH PROFORMA INVOICE/603/E DD 9511.16 :BL-ORIGINAL 3 FOR SHIPPER-ISSUED TO THE ORDER OF MARIO COMMA S.A. NOTIFY THE SAME, MARKED FREIGHT PREPAID. +SIGNED COMMERCIAL INVOICE, THREE FOLD. +CERTIFICATE OF ORIGIN ISSUED BY CHAMBER OF COMMERCE, IN COPY. +BENEFICIARIES CERTIFICATE, STATING THAT THE ORIGINALS OF THE ABOVE DOCUMENTS HAVE BEEN SENT TOGETHER WITH THE GOODS. +POL/CERT OF INSURANCE IN FAVOR OF APPLICANTS, COVERING ALL RISKS FROM WAREHOUSE TO WAREHOUSE CLAUSED 'CLAIMS PAYABLE IN BILBAO' :DOCUMENTS MUST BE SENT TO: BANCO AMERICANO, GRAN VIA. 6, 88001 GRANADA, SPAIN : ALL BANKING CHARGES OUTSIDE OF SPAIN. FOR BENEFICIARIES ACCOUNT :MAY ADD :[SWIFT] BANCO AMERICANO, S.A., NEW YORK, NY

:59

:ben customer

:32B :39B :41A :42P :43P :43T :44A :44B :45A

:currency amount amount :amount spec :available with :by :drafts :part shipment :transshipment :ship-disp-take :ship-dispatch-to :shipment of

:46A

:docmt required

:47A :71B :49 :53A

:addtnl cond :charges for confrmtn instr senders corr

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BANK OF THE WEST BANK OF THE WEST

EXAMPLE OF DEFERRED PAYMENT USANCE L/C IN SWIFT FORMAT AND SHIPPED "EX-WORKS" (SAMPLE OF A TYPICAL DETAILED MIDDLE EASTERN L/C)
RECEIVED FROM: BANK OF BETHLEHEM :40A :20 :40E :31D :50 :form of d/c :tran reference applicable rules :expiry :ord customer :IRREVOCABLE :412-01-051884645 :UCP600 :080712 CALIFORNIA (USA) :ICES AND SORBET, LTD. 80 BEN GURION STREET HERZLIYA 46603 :ICE SCREAM, INC. 43 MELTDOWN STREET MOUNTAIN VIEW, CALIFORNIA 94040 :USD 28432.80 :BANK OF BETHLEHEM :DEF PAYMENT :AT 90 DAYS AFTER DATE OF B/L WITHOUT INTEREST AND CHARGES :PROHIBITED :PERMITTED :USA PORT :ASHDOD PORT :080811 :FROZEN DESERTS PER P.O. 803A, INCOTERMS 2000: EX-WORKS GEORGIA GOODS OF U.S. ORIGIN :1) MARINE BILL OF LADING 2/3 ORIGINALS PLUS 3 NON-NEGOTIABLE COPIES CLEAN ON BOARD MADE OUT TO THE ORDER OF BANK BETHLEHEM TEL AVIV MAIN BRANCH NOTIFY APPLICANT MARKED FREIGHT PAYABLE AT DESTINATION SPECIFYING THAT IN VIEW OF THE DANGER OF CONFISCATION WARRANTED VESSEL IS NOT TO CALL AT PORTS AND NOT TO ENTER THE TERRITORIAL WATERS OF SYRIA, LEBANON, IRAQ, IRAN, SAUDI ARABIA, YEMEN, SUDAN, LIBYA OR OTHER ARAB COUNTRIES EXCEPT EGYPT AND JORDAN PRIOR TO UNLOADING IN ISRAEL UNLESS IN DISTRESS OR SUBJECT TO FORCE-MAJEURE 2) ORIGINAL INVOICE SIGNED BY BENEFICIARY IN 6 COPIES 3) PACKING LIST IN 6 COPIES 4) PHOTOCOPY OF ORIGINAL U.S. CERTIFICATE OF ORIGIN FOR EXPORTS TO ISRAEL MARKED 'P' IN BOX 8 SIGNED BY BENEFICIARY, NOTARIZED BY A NOTARY PUBLIC, AND CERTIFIED BY AN APPROPRIATELY CONSTITUTED LOCAL BUSINESS ORGANIZATION, SUCH AS A CHAMBER OF COMMERCE OR BOARD OF TRADE 5) BENEFICIARY'S SIGNED DECLARATION STATING THAT 1/3 ORIGINAL B/L ORIGINAL U.S. CERTIFICATE OF ORIGIN FOR EXPORTS TO ISRAEL AND ONE SIGNED ORIGINAL OF EACH DOCUMENT (INCLUDING CERTIFICATE OF ANALYSIS) PRESENTED AT THE BANK WERE SENT DIRECTLY TO ICES AND SORBETS, LTD., BY SPECIAL COURIER 6) PHOTOCOPY OF CERTIFICATE OF ANALYSIS.

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:ben customer

:32B :41A :42P :43P :43T :44A :44B :44C :45A :46A

:currency amount :available with :by :drafts :part shipment :trans shipment :ship-disp-take :ship-disp-to :latest ship-date :shipment of :docmt required

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BANK OF THE WEST

EXAMPLE OF DEFERRED PAYMENT USANCE L/C IN SWIFT FORMAT AND SHIPPED "EX-WORKS" (SAMPLE OF A TYPICAL DETAILED MIDDLE EASTERN L/C) Continued...
:47A addtnl cond :1) ALL DOCUMENTS TO MENTION OUR L/C NUMBER 386-43 2) ADDITIONS, CORRECTIONS, ERASURES, AMENDMENTS MUST BE DULY STAMPED AND INITIALED BY THE PARTY/AUTHORITY ISSUING THE DOCUMENT IN QUESTION 3) A CHARGE OF USD 100.00 (OR ITS COUNTERVALUE)PLUS RELATED TELEX COSTS WILL BE APPLICABLE IN CASE DISCREPANT DOCS ARE PRESENTED. 4) INVOICE TO STATE INCOTERMS AND ORIGIN OF GOODS, IF MENTIONED IN FIELD 45 5) INVOICES TO STATE THAT GOODS ARE OF FIRST QUALITY AND MADE IN U.S.A. 6) FORWARDER'S B/L ISSUED WITH ALL PARTICULARS AS PER FIELD 46A DOC. NO. 1 ACCEPTABLE 7) ALL DOCUMENTS, EXCEPT MARINE B/L, TO BE ISSUED IN THE NAME OF PROGRESS (1984) LTD. P.O. BOX 529, INDUSTRIAL AREA, ASHKELON. :ALL BANKING CHARGES AND COMMISSIONS OUTSIDE ISRAEL INCLUDING REIMBURSING BANK'S CHARGES ARE FOR BENEFICIARY'S ACCOUNT. :WITHOUT : AFTER RECEIPT OF DOCUMENTS BY US STRICTLY CONFORMING WITH CREDIT TERMS WE SHALL AUTHORIZE YOU TO CLAIM REIMBURSEMENT ON MATURITY DATE ON BANK OF BETHLEHEM 80 WALL STREET, NYC, NY 10036 WHOM WE SHALL AUTHORIZE TO HONOR YOUR CLAIM. PLEASE ADVISE US BY TESTED TELEX/ SWIFT AMOUNT INVOICED, NAME OF STEAMER, DATE, AND NUMBER OF B/L. ALTERNATIVELY, ADVISE CANCELLATION IF CREDIT UNUTILIZED, FORWARD US DOCS BY REGISTERED AIRMAIL TO OUR ADDRESS 444 BALTHAZAR ST., HAIFA 61000 ISRAEL FOR THE ATTENTION OF L/C DEPARTMENT. :L/C SUBJECT TO UCP DC 2007 (ICC 600)

:71B :49 :78

:charges for :confrmtn instr :instr to bank

:72

:bk to bk info

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BANK OF THE WEST

SAMPLE EXPORT QUOTATION WORKSHEET
Date: Customer Purchase Order No. Merchandise: Gross Weight Ship by Air From Export Selling Price Export Packing Inland Freight to Departure Point Consular / Legalization Fees Inspection Fees Freight Forwarders Fees Banking Fees Other Charges FOB - OCEAN PORT OF LOADING or FCA - AIRPORT OR PLACE OF LOADING Ocean Freight Air/Truck/Rail Freight CFR - OCEAN PORT OF UNLOADING or CPT - AIRPORT OR PLACE OF UNLOADING Insurance Premium CIF - OCEAN PORT OF UNLOADING or CIP - AIRPORT OR PLACE OF UNLOADING This quote is based on current prices and is valid until Terms: Prepaid L/C Documentary Collection Open Account $ $ $ Ocean Cubic Measurement: Truck/Rail To: $ Pro Forma Invoice No. Country: Date Received: ______

Prepared by _______________________

Authorized by: __________________________

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BANK OF THE WEST

SAMPLE SIGHT EXPORT LETTER OF CREDIT
INSTRUCTIONS TO BUYER

Please instruct your Bank to open an Irrevocable Letter of Credit by SWIFT in accordance with the following terms and conditions:

Beneficiary:

American Exporter, Inc. Balance of Payments St. Anywhere, California 90000 Bank of the West Global Trade Services 1977 Saturn St. (SC-MPK-02-G) Monterey Park, CA 91755

Advising Bank:

SWIFT: BWSTUS66LAX

Drafts are to be drawn at sight and are to be available by Negotiation or Payment at the counters of Bank of the West, Los Angeles with TT Reimbursement allowed. Amount: Currency / US $ ___________________________________

To be invoiced: FOB FCA CFR CIF OTHER (Refer to INCOTERMS for more information on shipping terms) Expiry Date: _________________________ Place: _______________________________________ Merchandise Description:_____________________________________________________________ From: _________________________________To: ________________________________________ Latest Ship Date:___________________ LADING: (Refer to Transport Documents section for more information) Full set original clean on board ocean bills of lading issued to order of _____________________ ___________________________________________________ Marked freight: Collect Prepaid Marked notify: _______________________________________________________________________ ___________________________________________________________________________________ Air Waybill consigned to _________________________________________________________ Marked freight Collect Prepaid, Marked notify: __________________________________________ ___________________________________________________________________________________ Full set original clean multimodal transport document issued to order of _____________________________________________________ Marked freight: Collect Prepaid Marked notify: _______________________________________________________________________ ___________________________________________________________________________________

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BANK OF THE WEST

DOCUMENTS: (Refer to Export Documents section for details) Signed Commercial Invoice in ___________________ copies Packing list in ___________________ copies Certificate of ____________________ Origin issued by ______________________________ Inspection Certificate in ____________________ copies, issued by _____________________ certifying that ________________________________________________________________ Other document (s) ___________________________________________________________ INSURANCE: Covered by: Applicant Beneficiary

Documents to be presented to the negotiating bank within _____ days after the date of shipment. (If blank, 21 days.) Transshipment: Partial Shipments: Permitted Permitted Not Permitted Not Permitted

Confirmation required: Yes No (Confirmation requires a credit decision by Bank of the West. Please check with us prior to having the L/C opened.) L/C to be Transferable: No Yes, with Bank of the West as transferring Bank. Charges other than issuing bank's charges are for account of: Applicant Beneficiary OTHER INSTRUCTIONS: Letter of credit is to be issued at least _____ days prior to the latest shipment date. L/C is to be subject to the Uniform Customs and Practice for Documentary Credit (2007 Revision) International Chamber of Commerce Publication No. 600. _________________________________________________________________________________ _________________________________________________________________________________ Shipment will be effected after our receipt of a satisfactory Letter of Credit. If you are unable to comply with any of the foregoing, please advise us by e-mail at ________________________________ FAX No. ____________________________ Phone No. _________________________ ANY DEVIATION FROM THE ABOVE TERMS WITHOUT OUR CONSENT WILL DELAY SHIPMENT UNTIL SUCH TIME AS THE LETTER OF CREDIT IS AMENDED.

THIS IS A SAMPLE ONLY. DO NOT SEND THIS FORM TO YOUR BUYER. USE THIS FORM AS A GUIDE TO PREPARE YOUR OWN INSTRUCTION LETTER. DELETE THE INFORMATION THAT IS NOT APPLICABLE TO YOUR TRANSACTION.

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BANK OF THE WEST

SAMPLE USANCE (TIME) EXPORT LETTER OF CREDIT
INSTRUCTIONS TO BUYER Please instruct your Bank to open an Irrevocable Letter of Credit by SWIFT in accordance with the following terms and conditions: Beneficiary: American Exporter, Inc. Balance of Payments St. Anywhere, California 90000 Bank of the West Global Trade Services 1977 Saturn St. (SC-MPK-02-G) Monterey Park, CA 91755 ________ days sight,

Advising Bank:

SWIFT: BWSTUS66LAX

Drafts at:

________ days from shipment date

Drafts drawn on and available by acceptance with: Issuing Bank Advising Bank Reimbursing Bank (Acceptance requires a credit decision on the part of the drawee bank. Please check with us for details.) Acceptance Commission for account of: Applicant Beneficiary Discount charges (if any) for account of: Applicant Beneficiary Acceptance and discount are for buyers account, therefore L/C to be paid at sight. Amount: Currency / US $ _____________________________________________________

To be invoiced: FOB FCA CFR CIF OTHER (Refer to INCOTERMS section for more information on shipping terms) Expiry Date: _________________________ Place: ______________________________ Merchandise Description: From: _______________ To: ________________ Latest Ship Date: ________________ LADINGS: (Refer to Transport Documents section for more information) Full set original clean on board ocean bills of lading issued to order of _____________________ _____________________________________________ Marked freight: Collect Prepaid, Marked notify: _________________________________________________________________ Original clean Air Waybill consigned to ______________________________________________ Marked freight Collect Prepaid, Marked notify: ____________________________________ Full set original clean multimodal transport document issued to order of ____________________ ______________________________________________ Marked freight: Collect Prepaid, Marked notify: _________________________________________________________________

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BANK OF THE WEST

DOCUMENTS: (Refer to Export Documents section for details) Signed Commercial Invoice in _____ copies. Packing list in _____ copies. Certificate of Origin issued by __________________________________________________ Inspection Certificate in copies, issued by _________________________________________ certifying that _______________________________________________________________ Other document (s)___________________________________________________________ Applicant Beneficiary

INSURANCE: Covered by:

Documents to be presented to the negotiating bank within days after the date of shipment. (If blank, 21 days.) Transshipment: Partial Shipments: Permitted Permitted Not Permitted Not Permitted

Confirmation required: Yes No (Confirmation requires a credit decision by Bank of the West. Please check with us prior to having the L/C opened.) L/C to be Transferable: No Yes, with Bank of the West as transferring Bank.

All charges other than issuing & reimbursing banks charges are for account of: Applicant Beneficiary OTHER INSTRUCTIONS: Letter of credit is to be issued at least _____ days prior to the latest shipment date. L/C to be subject to the Uniform Customs and Practice for Documentary Credit (2007 Revision) International Chamber of Commerce Publication No. 600. Shipment will be effected after our receipt of a satisfactory Letter of Credit. If you are unable to comply with any of the forgoing, please advise us by: Fax _______________ Phone _______________ ANY DEVIATION FROM THE ABOVE TERMS WITHOUT OUR CONSENT WILL DELAY SHIPMENT UNTIL SUCH TIME AS THE LETTER OF CREDIT IS AMENDED.

THIS IS A SAMPLE ONLY. DO NOT SEND THIS FORM TO YOUR BUYER. USE THIS FORM AS A GUIDE TO PREPARE YOUR OWN INSTRUCTION LETTER. DELETE THE INFORMATION THAT IS NOT APPLICABLE TO YOUR TRANSACTION.

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BANK OF THE WEST

EXPORT LETTER OF CREDIT CHECKLIST
BUYER: PURCHASE ORDER NO. L/C NO. ISSUING BANK: I. TERMS: Subject to UCP 600 Letter of Credit has been Seller's Name & Address Buyer's Name & Address Amount Expiry Date & Place Draft Tenor Goods Description Latest Shipping Date Documents Required Document Presentment Days Banking Charges Yes Advised O.K. O.K O.K. O.K. O.K. O.K. O.K. O.K. O.K. O.K. Needs amending Confirmed Needs Amending Needs Amending Needs Amending Needs Amending Needs Amending Needs Amending Needs Amending Needs Amending Needs Amending Needs Amending DATE: PRO FORMA INV. NO. DATED:

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BANK OF THE WEST

II. SHIPPING INSTRUCTIONS: Export License Needed Need Documents Legalized Partial Shipments Trans-shipment Ship by ocean/air INCOTERM Insurance Coverage Shipment from / to Consignee Shipping Marks III. BANKING: L/C Negotiation Restricted Availability & Settlement Submit Documents to (Bank)
IV.

Yes Yes O.K. O.K. O.K. O.K. O.K. O.K. O.K. O.K.

No No Needs Amending Needs Amending Needs Amending Needs Amending Needs Amending Needs Amending Needs Amending Needs Amending

Yes O.K.

No Needs Amending

SEND L/C COPY TO: Forwarder Credit Dept. Traffic Dept. Inventory Control Sales Dept. Production Accts. Payable Other: ___________

V.

FINAL APPROVAL: Letter of Credit Acceptable Needs amending

Amend the following: _______________________________________________________ ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________

Checked By: ___________________ Approved By: ______________________________

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BANK OF THE WEST

DRAFTS UNDER EXPORT LETTERS OF CREDIT When exporters make a drawing under a letter of credit, the presented documents (bill of lading, invoice, packing list, certificate of origin, etc.) are usually accompanied by a draft, which is basically a check, representing demand for payment. The draft or Bill of Exchange is drawn and signed by the exporter (seller). The terms of the draft are at sight or a number of days after sight or after the bill of lading date. Historically, the draft (especially the usance draft) is the instrument used for litigation. Although this is no longer true in most jurisdictions, the draft is still used as the instrument to demand payment. At sight means that the draft is paid upon sighting of the documents which are found to be conforming. The terms, which specify a number of days after sight or after the B/L date, are commonly called usance, indicating that the issuing bank is obligated to pay the beneficiary (exporter) at some specific future date. For usance drafts, the obligation to pay begins when the drawee bank accepts the draft and a bankers acceptance is created. The letter of credit specifies on which bank the draft is to be drawn. For export letters of credit where the beneficiary is a U.S. exporter, the drawee is usually either the issuing bank or the issuing banks designated U.S. reimbursing bank. Letters of credit in the SWIFT format specify the drawee bank (see reference sheet Export Letters of Credit: Communication & Payment for a brief explanation of the SWIFT network among banks). When the drawee bank is the issuing banks designated U.S. reimbursing bank, this banks name is repeated in section 53A, senders correspondent bank. For example, BNP Paribas may issue a letter of credit advised through Bank of America to one of Bank of Americas customers. The letter of credit may call for the drafts to be drawn on Bank of the West. The letter of credit may spell out the name of the drawee bank or quite often just use the SWIFT code for that bank, i.e. BWSTUS66LAX for Bank of the West. If the SWIFT code is not clear as to the actual name of the drawee bank, please call our Global Trade Services Operations staff or one of our Senior Trade Managers for assistance. When discussing specific questions about your export L/C with our staff, it is important that you have our reference number which is an eight-digit number preceded by EL, such as EL60712534, for letters of credit advised by us. The parties specified on the draft or Bill of Exchange are: 1. The exporter (beneficiary of the letter of credit) is the drawer of the draft. The exporters company name must be exactly as it appears in the letter of credit. The exporter signs the draft. 2. The importer (account party in the L/C) is the buyer of the merchandise under the export commercial letter of credit. 3. The payee (pay to the order of) may be the beneficiary (exporter) of the L/C or its designated negotiating bank. If the exporter is the payee on the draft, then the draft must be endorsed to the negotiating bank. It is usually easier to show the negotiating bank as the payee. 4. The draft is addressed TO the drawee bank, which may be the issuing bank or its designated U.S. reimbursing bank (but should never be the buyer). Under our printed draft form, the DRAWN UNDER space details the issuing banks name (at the top of the SWIFT), the issuing banks L/C number, and the date which that L/C was issued in the foreign country.

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BANK OF THE WEST

European credits usually do not call for drafts as stamp tax on drafts in Europe is common. Usance credits in Europe usually take the form of a deferred payment credit with no draft required. A draft should not have any corrections, deletions, or erasures. You can make your own draft on your personal computer. The more sophisticated and efficient exporters duplicate the bill of exchange form on their PCs and fill in the information accordingly. This, of course, makes it very easy to correct mistakes and prepare a perfect draft. Although drafts are similar to checks, they do not possess any special characteristics such as micro encoding and thus the easiest method of preparing drafts is to use your PC. The following draft examples provide for an original and a copy which differs only in that the original states THIS FIRST BILL OF EXCHANGE (SECOND UNPAID) and the carbon copy states THIS SECOND BILL OF EXCHANGE (FIRST UNPAID). The reason for the two drafts goes back to the days when the documents were sent in separate mailings in the event that one set was lost. First Example: a sight drawing. A $500,000 sight letter of credit is opened by Big Gifu Bank Limited in Gifu, Japan on September 1, 2010 with reference number LC137045. Big Gifu Bank advises the letter of credit through Bank of the West and specifies XYZ American Bank as its designated U.S. reimbursing bank. The account party under the L/C is Kwa Corporation, 3-12 Hokka Street, Gifu, Japan. The beneficiary (exporter) of the letter of credit is Snowboards and Skis, Inc. (SSI). The L/C permits partial drawings covering the shipment of snowboards to Japan. The first drawing is for $100,000. On October 2 the exporter, Snowboards and Skis, Inc., assembles the required documents to be presented under the letter of credit and dates the draft accordingly. Since SSI numbers drafts drawn under letters of credit consecutively for all drawings under export letters of credit, its internal reference number is 43. Second Example: a usance L/C calling for drafts to be drawn at 90 days after sight. The details of the letter of credit are the same as above except for the fact that it is now a usance credit. Third Example: a usance L/C calling for drafts to be drawn at 90 days after bill of lading date.

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BANK OF THE WEST

SAMPLE DRAFTS

BILL OF EXCHANGE
AMOUNT: $ AT NUMBER: DATE: SIGHT OF THIS FIRST BILL OF EXCHANGE (SECOND UNPAID)

PAY TO THE ORDER OF BANK

OF THE WEST THE SUM OF

VALUE RECEIVED AND CHARGE THE SAME TO ACCOUNT OF DRAWN UNDER L/C NUMBER TO DATED DRAWER _______________________________ Authorized Signature

BILL OF EXCHANGE
AMOUNT: $ AT NUMBER: DATE: SIGHT OF THIS SECOND BILL OF EXCHANGE (FIRST UNPAID)

PAY TO THE ORDER OF BANK

OF THE WEST THE SUM OF

VALUE RECEIVED AND CHARGE THE SAME TO ACCOUNT OF DRAWN UNDER L/C NUMBER TO DATED DRAWER _______________________________ Authorized Signature

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BANK OF THE WEST

BILL OF EXCHANGE
AMOUNT: $100,000.00 AT NUMBER: 43 DATE: October 2, 2010 SIGHT OF THIS FIRST BILL OF EXCHANGE (SECOND UNPAID)

PAY TO THE ORDER OF BANK OF THE U.S. dollars one hundred thousand

WEST THE SUM OF

VALUE RECEIVED AND CHARGE THE SAME TO ACCOUNT OF Kwa Corporation, 3-12 Hokkaido Street, Gifu, Japan DRAWN UNDER Letter of Credit issued by Big Gifu Bank Ltd., Gifu, Japan L/C NUMBER LC137045 TO: XYZ American Bank New York, New York DATED September 1, 2010 DRAWER Snowboards and Skis, Inc. _______________________________ Authorized Signature

BILL OF EXCHANGE
AMOUNT: $100,000.00 AT NUMBER: 43 DATE: October 2, 2010 SIGHT OF THIS SECOND BILL OF EXCHANGE (FIRST UNPAID)

PAY TO THE ORDER OF BANK OF THE U.S. dollars one hundred thousand

WEST THE SUM OF

VALUE RECEIVED AND CHARGE THE SAME TO ACCOUNT OF Kwa Corporation, 3-12 Hokkaido Street, Gifu, Japan DRAWN UNDER Letter of Credit issued by Big Gifu Bank Ltd., Gifu, Japan L/C NUMBER LC137045 TO: XYZ American Bank New York, New York DATED September 1, 2010 DRAWER Snowboards and Skis, Inc. _________________________________ Authorized Signature

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BANK OF THE WEST

BILL OF EXCHANGE
AMOUNT: $100,000.00 NUMBER: 43 DATE: October 2, 2010 AT Ninety Days after SIGHT OF THIS FIRST BILL OF EXCHANGE (SECOND UNPAID) PAY TO THE ORDER OF BANK OF THE U.S. dollars one hundred thousand

WEST THE SUM OF

VALUE RECEIVED AND CHARGE THE SAME TO ACCOUNT OF Kwa Corporation, 3-12 Hokkaido Street, Gifu, Japan DRAWN UNDER Letter of Credit issued by Big Gifu Bank Ltd., Gifu, Japan L/C NUMBER LC137045 TO: XYZ American Bank New York, New York DATED September 1, 2010 DRAWER Snowboards and Skis, Inc. _________________________________ Authorized Signature

BILL OF EXCHANGE
AMOUNT: $100,000.00 NUMBER: 43 DATE: October 2, 2010 AT Ninety Days after SIGHT OF THIS SECOND BILL OF EXCHANGE (FIRST UNPAID) PAY TO THE ORDER OF BANK OF THE U.S. dollars one hundred thousand

WEST THE SUM OF

VALUE RECEIVED AND CHARGE THE SAME TO ACCOUNT OF Kwa Corporation, 3-12 Hokkaido Street, Gifu, Japan DRAWN UNDER Letter of Credit issued by Big Gifu Bank Ltd., Gifu, Japan L/C NUMBER LC137045 TO: XYZ American Bank New York, New York DATED September 1, 2010 DRAWER Snowboards and Skis, Inc. _______________________________ Authorized Signature

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BANK OF THE WEST

Sample draft with a tenor of 90 days after B/L date

BILL OF EXCHANGE
AMOUNT: $100,000.00 NUMBER: 43 DATE: October 2, 2010 AT Ninety Days after SIGHT OF THIS FIRST BILL OF EXCHANGE (SECOND UNPAID) Bill of Lading Date PAY TO THE ORDER OF BANK OF THE U.S. dollars one hundred thousand

WEST THE SUM OF

VALUE RECEIVED AND CHARGE THE SAME TO ACCOUNT OF Kwa Corporation, 3-12 Hokkaido Street, Gifu, Japan DRAWN UNDER Letter of Credit issued by Big Gifu Bank Ltd., Gifu, Japan L/C NUMBER LC137045 TO: XYZ American Bank New York, New York DATED September 1, 2010 DRAWER Snowboards and Skis, Inc. __________________________________ Authorized Signature

For sight letter of credit calling for drafts at sight

BILL OF EXCHANGE
AMOUNT: $ (amount of drawing under L/C) NUMBER: Exporters internal ref. number DATE: Date documents are presented to bank

AT (Leave blank if sight L/C) SIGHT OF THIS FIRST BILL OF EXCHANGE (SECOND UNPAID) PAY TO THE ORDER OF BANK OF THE WEST THE SUM OF Spell out amount of drawing under L/C VALUE RECEIVED AND CHARGE THE SAME TO ACCOUNT OF: Name of account party on the letter of credit (buyer of merchandise) and address DRAWN UNDER Letter of credit issued by (name of issuing bank and city) L/C NUMBER given by issuing bank DATED (date when L/C was issued) TO: Name of issuing bank or its Designated U.S. bank upon Which the drafts are to be Drawn; city and country DRAWER Name of exporter exactly as it appears in the letter of credit __Signed by Exporters Authorized Signer Authorized Signature

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BANK OF THE WEST

For Usance Letter of Credit calling for Time Drafts

BILL OF EXCHANGE
AMOUNT: $ (amount of drawing under L/C) NUMBER: Exporters internal ref. number DATE: Date documents are presented to bank

AT (Specify # of days after) SIGHT OF THIS FIRST BILL OF EXCHANGE (SECOND UNPAID) PAY TO THE ORDER OF BANK OF THE WEST THE SUM OF Spell out amount of drawing under L/C VALUE RECEIVED AND CHARGE THE SAME TO ACCOUNT OF Name of account party on the letter of credit (buyer of merchandise) and address DRAWN UNDER Letter of credit issued by (name of issuing bank and city) L/C NUMBER given by issuing bank DATED (date when L/C was issued) TO: Name of issuing bank or its Designated U.S. bank upon Which the drafts are to be Drawn; city and country

DRAWER Name of exporter exactly as it appears in the letter

of credit __Signed by Exporters Authorized Signer Authorized Signature

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BANK OF THE WEST

TRANSPORT DOCUMENTS
The transport document is issued by the Carrier whether a shipping line, airline, trucking company or railroad. They come in various forms and each serves several, but not necessarily all of the following functions: 1. Receipt for the goods, evidencing loading, dispatch, or taking in charge and indicating the general condition of the goods received for shipment. 2. Contract for carriage between the shipper and the carrier 3. Invoice from the carrier for charges. 4. Negotiable document exchangeable for money, allowing goods to be sold in transit. 5. Title Document representing ownership of the goods, which will only be released by the shipping company against presentation of a signed original document. A negotiable bill of lading for example, serves all five functions. For the exporter, selling on a letter of credit or documentary collection basis, the last two functions are the most important. A negotiable title document means that the buyer can only obtain the merchandise if he surrenders an original bill of lading to the carrier. On L/C or D/P collection sales, where documents move through the banks, the buyer must first pay the bank for the bill of lading or signs a promissory note in the case of a D/A collection. Only then will the bank release the bill of lading. Negotiable bills of lading come in two forms: 1. Marine bills of lading convey title to the goods and are negotiable title documents when issued TO ORDER. This would be expressed in the Consignee block on the B/L as TO ORDER OF SHIPPER, TO ORDER OF ABC BANK, or TO ORDER OF 123 COMPANY. When shipment is made with an order B/L, the buyer only gets the merchandise if he surrenders an original B/L to the carrier. All other copies marked Original then become void. CAUTION: If an export L/C calls for the B/L to be consigned to the buyer or for 1/3 original B/L to be sent directly to the buyer. The buyer will obtain the merchandise and if the L/C documents contain discrepancies the buyer may refuse payment to the beneficiary even though he already has the goods. Less common is the straight consigned marine bill of lading which does not convey title and is not negotiable. As such, the buyer does not need an original to obtain the merchandise from the carrier. This negates the utility of the letter of credit and documentary collection. 2. Multimodal bills of lading are used when two or more forms of transport are involved from place of receipt to place of delivery. In other respects they are the same as marine bills of lading and may be issued either in negotiable or straight form. NON-NEGOTIABLE TRANSPORT DOCUMENTS INCLUDE: Charter Party bills of lading are contracts between the ship owner and the chartering party under which the vessel is put at the disposal of the charterer. Sea Waybills are not negotiable. They simply evidence that goods have been received for shipment and should only be used when title and payment/financing are not issues. Their function is contract, receipt, and invoice as discussed earlier.

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BANK OF THE WEST

Air Waybills are never negotiable. They are always straight consignments even if TO ORDER is typed in the Consignee block. Not being a title document, but merely a receipt for shipment, the importing buyer can pick up the merchandise at the airport simply by providing proper identification to the carrier, without the need for even a copy of the Air Waybill. Question: When a letter of credit or documentary collection is used, how does the exporter prevent the buyer from getting the merchandise without paying for it? Answer: The Air Waybill consignee is the buyers bank. That bank will transfer the goods to the buyer through an Air Release, but only after the buyer has paid or obligated himself to pay for the merchandise. Air Waybills should only be consigned to the buyers bank with that banks permission. Truck and Rail Waybills are both receipts for goods, contracts for carriage and invoices. They are always straight consignments, never negotiable, and should only be used when the exporter is prepared to allow the buyer to get the goods irrespective of payment being made. Courier & Postal receipts are always addressed to a specific consignee; are not negotiable and should only be used if getting paid is not a consideration. They are basically delivery instructions for a specific consignee at a specific address. Almost all banks will refuse to accept a parcel consigned to them. Shipments by courier or post should only be consigned to a bank if that banks L/C so instructs or if the bank has specifically authorized delivery to them under a documentary collection. Forwarding Agents Certificates of Receipt or Transportation (FCR/FCT) are not transport documents. They do not evidence shipment of the goods; only their receipt by the forwarder. IN SUMMARY, when the payment method is letter of credit or documentary collection make sure the appropriate transport document and consignment are used. Otherwise, the unfortunate situation may arise where the buyer obtains the merchandise and never pays for it. Remember, under a waybill all a consignee has to do to secure delivery is to identify himself to the carrier as the manifested consignee and claim delivery. Documentation (other than proof of identity) is not required. Please consult with your freight forwarder about the nuances of transport documents and the relationship of payment versus control of goods.

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BANK OF THE WEST

SUNDAE
Merchant Marine Co.
THE GLUTTONOUS GOURMAND 1234 LIPIDS LANE MANTECA, CA 93309 U.S.A.
Consignee (Complete name and address)

BILL OF LADING
Document N0.

ORIGINAL

080941234B
B/L No. HDMU

Shipper / Exporter (complete name and address)

WATC123456
Export References

TCNG12345678

A12345-2
Forwarding Agent Reference

TO ORDER OF SHIPPER

OUTBOUND ASSOCIATES INC. FMC-1234 ONE EXPORT LANE, UNIT 10 SAN FRANCISCO CA 94107
Point & Country of Origin USSEA Domestic Routing/Export instructions

Notify Party (complete name and address)

FAT CHANCE TRADING LTD. 3-567 NIHON KAIZU-CHO KAIZU-CITY GIFU-PREF JAPAN
Pre-Carriage by Ocean Vessel / Voyage / Flag HYUNDAI REPUBLIC V 078W Port of Discharge NAGOYA, JAPAN Container No./Seal No. Marks and Numbers or HDMU1234560 SEAL: 1111111 864 BALES 52520 LBS HDMU2345678 SEAL: 2222222 864 BALES 53600 LBS Place of Receipt TACOMA, WA, CY Port of Loading TACOMA, WA For Transshipment to No. of Containers Other Pkgs

*U.S.A PORT **JAPAN PORT

Onward Inland Routing Place of Delivery* NAGOYA, JAPAN, CY

Final Destination (Merchants Ref)

PARTICULARS FURNISHED BY SHIPPER

Description of Packages and Goods

Gross Weigh 118,570.0000 KGS 261,400.0000 LBS

Measurement

SHIPPER'S LOAD, STOW & COUNT 5X40 HIGH CUBES S.L.A. C: VARIOUS ANIMAL FEED "CPR JAPAN 4320 BALES 118.5703 MTS

LETTER OF CREDIT NO. 98/80134 AES ITN X20080911025021 FREIGHT PREPAID - LADEN ON BOARD HYUNDAI REPUBLIC 78 ON 9/28/06 DFSU3456789 S/C# 70233 SEAL: 3333333 NO SED REQUIRED-AES-OPT2!9ii711969 864 BALES .942766537-A20445-2 52560 LBS THESE COMMODITIES, TECHNOLOGY OR SOFTWARE WERE EXPORTED FROM THE U.S. IN ACCORDANCE WITH E.A.R DIVERSION CONTRARY TO U.S. LAW PROHIBITED Total Number of Containers or Packages (in words) THREE - FORTY FOOT HIGH CUBE CONTAINERS Freight & Charges FREIGHT AS ARRANGED Declared Value (Optional) US $ Rate Total Unit Prepaid Collect

(PACKAGE LIMITATION CLAUSE) On Board Date Section 4 (5) of the U.S. carriage of Goods by Sea Act-1936: Neither the carrier of the ship Number of Original B(s)/L shall in any event be or become liable for any loss or damage to or in connection with the THREE(3) SEP. 26, 2008 transportation of goods in an amount exceeding $500 per package lawful money of the Untied States. or in the case of goods not shipped in packages, per customary freight unit or the equivalent of that sum in other currency. unless the nature and (OBD : SEPTEMBER TWENTY EIGHTH, 2008) value of such goods have been declared by the shipper before shipment and inserted in the Dated at: PHOENIX AZ SEPT.28, 2008 Bill of Lading and additional freight has been paid as required. This declaration if embodied in the Bill of Lading, shall, shall be prima facie evidence, but shall not be conclusive on the carrier. THIS CLAUSE SHALL APPLY ONLY TO GOODS Hyundai America Shipping Agent, Inc. MOVING TO OR FROM PORTS OF UNITED STATES. IN ACCEPTING THIS BILL OF LADING, the shipper., owner and consignee of the goods and the holder of the Bill of Lading expressly accept and agree to all its, stipulations, exceptions, and as agent for Hyundai Merchant Marine C.O. LTD. Carrier conditions, whether written, stamped, or printed as fully as if signed by such shipper, owner, consignee and/or holder. no agent is authorized to waive any of the provisions of the clause. IN WITNESS. WHEREOF, the master, or agency of said ship has affirmed By to Bill of Lading all of this tenor and date. ONE of which being accomplished, the others to stand void. * Applicable only when this document is used as an intermodal transport Bill of Lading.

Captain Nemo

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BANK OF THE WEST

Shipper's Account Number Not Negotiable

999-12345678

123456789

Air Waybill
Issued by

RAG TRADE EXPORT CO. 123 RIP TORN ROAD BLOOMERS, CA 90001
/

AIR EDEN

Copies, 2, and 3 of this Air Waybill are originals and have the same validity.
It is agreed that the goods described herein are accepted in apparent good order and condition (except a s noted) f or car na ge SUB JECT T O T HE CONDIT ION S OF CO NT RACT ON T HE REVE R SE HER EOF. AL L GOODS MA Y B E CARRIE D B Y AN Y OT HER MEA N S INCLU DING ROAD O R A N Y O T H E R C A R R I E R UNLESS SPECIF IC CONT RARY INST RUCT IONS ARE GIV EN H ER EON B Y T HE S HI PPER, A ND SHIPPE R AGR EE S T HAT T HE SHI PMENT MA Y B E CARRIE D VIA INTERMEDIATE STOPPING PLACES WHICH THE CARRIER DEEMS APPROPRIATE. THE SHIPPERS ATTENTION IS DRAW N TO THE NOT ICE CONCERNING CARRIER'S LIMITATION OF LIABILITY. Shipper may increase such limitation of liability by declaring a higher value for carriage and paying a supplemental charge it required.

Consignees Name and Address

Consignee's Account Number

987654321

ADAM & EVE CLOTHES INC. 456 FIG LEAF PARKWAY GARDEN CITY, TAIWAN
Issuing Carriers Agent Name and City

SERPENTINE SERVICES LTD., SAN FRANCISCO, CA

Agent's IATA Code Account No

Accounting Information Reference Number Currency

Charge code

12-34567-890
Airport of Departure (Addr. of First Carrier) & Requested Routing Optional Shipping Information
Declared Value for Carriage Declared Value for Customs

SAN FRANCISCO AIRPORT USA

To
By First Carriers to by

TPE

AIR EDEN
Requested Fight / Date

USD
Ins. Amt.

PPD

MAX FREE

Airport of Destination

CHIANG KAI-SHEK
Inland Routing Information

AE 123 10-10

NIL

INSURANCE - If carrier offers insurance, and such Insurance is requested In accordance with the conditions thereof, indicate amount to be insured in figures in box marked Ins. Amt (Amount of Insurance).

FREIGHT PREPAID
SCI Diversion contrary to U.S. law prohibited. Nature and Quantity of Goods (Incl. Dimensions or Volume)

NOTIFY APPLICANT
These commodities, technology or software were exported from the United States in accordance with the Export Administration Regulations. Ultimate destination kg No. of Rate Class Chargeable / Pieces Rate/Chrg Total Commodity Gross Weight lb RCP Weight Item No.

23K 1 23K G.C.R

AS ARRANGED FICUS SYCOMORUS

23K
Weight Charge Valuation Charge Tax Total Other Charges Due Agent Total Other Charges Due Carrier COLLECT Other Charges

AS ARRANGED

PREPAID

AS AGREED
Shipper certifies that the particulars on the face hereof are correct and that insofar as any part of the consignment contains dangerous goods, such part is properly described by name and is in proper condition for carriage b y air according to the applicable Dangerous Goods Regulations.

SKY KING
SERPENTINE SERVICES AS AUTHORIZED AGENT FOR AIR EDEN Signature of Shipper or his Agent

AS AGREED
TOTAL PREPAID TOTAL COLLECT
Chrgs in Dest Currency

AS AGREED
Currency Conversion Rate

B. OEING
SEPT 28-08 SFO INTL USA B.OEING
Executed on (date) at (place) Signature of Issuing Carrier or its Agent Total Collect Charges

For Carriers Use only

Charges at Destination.

999-12345678 Back to Top

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BANK OF THE WEST EXPORT DOCUMENTS

Documents required for an international sale can vary significantly from transaction to transaction, depending on the destination and the product being shipped. At minimum, there will be two documents: the invoice and the transport document. The buyer will usually provide the seller with a list of documents needed to get the goods into his country as expeditiously and inexpensively as possible. Some documentary requirements are not open to negotiation, as they are needed by the importer to clear customs at the port of destination. This presentation discusses documentation in relation to export letters of credit. When the letter of credit payment method is used for an export sale, each document presented under the terms and conditions of the letter of credit must: Conform to all L/C terms and conditions Comply with the UCP 600 Agree with the data content of every other document For the documents listed, the number in parenthesis refers to the relevant UCP 600 article.
THE BILL OF EXCHANGE / DRAFT

Almost every letter of credit presentation and documentary collection is accompanied by a draft. This demand for payment is drawn by the seller on the payee. The payee on a letter of credit draft is always a bank. For a documentary collection it would be the buyer. Refer to the section in this handbook on Drafts under Export Letters of Credit for details.
COMMERCIAL INVOICE (14(e) & (i), 18)

The accounting document claiming payment from the buyer. include:

Normally an export invoice would

Sellers name and address Buyers name and address Issue Date Invoice Number Shipping marks and numbers Term of Sale: e.g. FOB, etc. Shipping information Info required by L/C Country of Origin L/C number Merchandise description, P.O. number, unit price, and total price

CONSULAR INVOICE / VISAED INVOICE (3)

For exchange control and balance of payments reasons, some countries do not allow the import of merchandise unless accompanied by a certificate issued by one of its officials in the exporters country. These certificates evidence that the shipment meets certain statutory or other regulations of the importing country. A visaed invoice is an original or copy of an invoice, which has been originally signed and/or stamped by a consulate official.

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BANK OF THE WEST

INSURANCE POLICY OR CERTIFICATE (28)

Every export sale should be covered by insurance. Who provides the coverage depends on the INCOTERM used. Insurance coverage is outside the scope of this explanation. For specifics, contact your insurance agent or freight forwarder as to who can provide insurance on anas needed basis or by blanket policy on an annual basis.
CERTIFICATES

When a letter of credit calls for a document to be issued as a certificate, that document must be signed and dated. Certificates come in a myriad of forms depending on the product and the country of destination. L/Cs often require that certificates be issued by reputable third party inspection surveyors such as the Societe Generale de Surveillance (SGS) or the U.S. Department of Agriculture. It is important to remember that each certificate required by an L/C will increase the cost of goods sold. Some of the most common certificates are discussed below. Certificates should always be issued before the goods are shipped. Certificates issued after the goods arrived in the country of import defeat the purpose of the letter of credit. CERTIFICATE OF ORIGIN (3, 14, 17) A signed statement certifying the country of origin of the goods being sold is sometimes required by regulation in the buyers country; may be as simple as a certificate signed by the seller. Certain countries may require it to be issued by a third party such a Chamber of Commerce, or be notarized, legalized, or visaed by their Embassy or Consulate. INSPECTION CERTIFICATE (3, 14, 17) An independent firm would usually conduct the inspection to ensure that the merchandise conforms to the buyers criteria. Inspection certificates should be based on quantifiable criteria. When an L/C is the method of payment, the criteria should be specifically spelled out in the letter of credit. WEIGHT LIST OR CERTIFICATE (3, 14, 17) Not synonymous to a packing list. This document breaks down the shipment by weight. signed only if a certificate is required.

Need be

USDA INSPECTION CERTIFICATE (14) This certificate is issued by the U.S. Department of Agriculture and covers grade and condition for agricultural products. It provides evidence that the produce was in good condition at the date and time of inspection and can be useful in the event of a claim. PHYTOSANITARY CERTIFICATE (3, 14, 17) Numerous foreign governments and buyers require a phyto for fresh plants and plant products. This certificate states that the product has been inspected and is free of harmful pests and plant diseases. They are issued by the USDA Animal and Plant Health Inspection Service.
PACKING LIST (3, 14, 17)

A mirror of the merchandise covered by the invoice, the packing list omits prices, but itemizes the merchandise by number of cartons, packages, etc. and the contents of each. Need not be signed unless called for in the L/C.

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BANK OF THE WEST

OTHER MISCELLANEOUS DOCUMENTS (14d & 14f) UCP 600 ARTICLE 14 items d & f state: D. DATA IN A DOCUMENT, WHEN READ IN CONTEXT WITH THE CREDIT, THE DOCUMENT ITSELF AND INTERNATIONAL STANDARD BANKING PRACTICE, NEED NOT BE IDENTICAL TO, BUT MUST NOT CONFLICT WITH, DATA IN THAT DOCUMENT, ANY OTHER STIPULATED DOCUMENT OR THE CREDIT. F. IF A CREDIT REQUIRES PRESENTATION OF A DOCUMENT OTHER THAN A TRANSPORT DOCUMENT, INSURANCE DOCUMENT OR COMMERCIAL INVOICE, WITHOUT STIPULATING BY WHOM THE DOCUMENT IS TO BE ISSUED OR ITS DATA CONTENT, BANKS WILL ACCEPT THE DOCUMENT AS PRESENTED IF ITS CONTENT APPEARS TO FULFILL THE FUNCTION OF THE REQUIRED DOCUMENT AND OTHERWISE COMPLIES WITH SUB-ARTICLE 14 (D).

SELECTED DOCUMENT REFERENCES IN THE UCP 600

DOCUMENT TOPIC Authentication requirements Copies of Complying Presentation Content of Documents v. Goods/ Services/ Performance Dated prior to L/C issuance Discrepancies Examination Fraudulent documents Issuer, ambiguity about Lost documents Non-stipulated documents Originals Signature on Stale documents UCP 600 ARTICLE 3 17 2, 14, 15, 16 13, 14 5 14 14, 15, 16 14 34 3, 17 35 14 17 17 14

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BANK OF THE WEST EXPORT LETTERS OF CREDIT PAYMENT AND DISCREPANCIES

Commercial Letters of credit issued by banks around the world are subject to the UCP 600 (2007 Revision). UCP stands for Uniform Customs and Practice for Documentary Credits, which is a body of rules (not law) on letters of credit. The conventions under the UCP were first adopted by the International Chamber of Commerce in 1933 and subsequently revised many times, with the most recent being in 2007. Federal laws and State laws, specifically Article 5 of the Uniform Commercial Code (UCC), also need to be taken into consideration. In addition to understanding the rules of letters of credit, as outlined in the UCP 600, exporters should have a basic understanding of International Commercial Terms (INCOTERMS) of trade such as FOB, CIF, CFR, DDP, etc. (Please see the reference sheet on INCOTERMS which provides a basic overview.) We recommend that the exporter order from ICC Book USA a copy of the UCP 600 and The Guide to Incoterms (phone: 212-703-5066; fax: 212-944-0012; www.iccbooksusa.com).

Strict versus Substantial Compliance

Under the UCP 600 issuing banks are obligated to make payment under letters of credit when conforming documents (bill of lading, packing list, invoice, certificates, etc.) are presented. The documents should be in strict compliance with the terms of the letter of credit. Generally, rulings in legal cases, revolving around the issue of payment when discrepant documents are presented, have come down on the side of strict compliance rather than substantial compliance. However, strict compliance does not demand oppressive perfectionism such as the obvious misspelling of a word. A typical discrepancy, which would fall under the strict compliance rule, is that the invoice does not describe the goods to correspond to the terms of the letter of credit.

Letters of Credit Deal in Documents Only

Another important principle underlying letters of credit is that all parties concerned deal with documents alone, and not with goods, services and/or other performances to which the documents may relate (UCP 600 Article 5). In practical terms this means that issuing banks make payments under letters of credit based on the examination of documents, not on the examination of the goods. The letter of credit does not protect the applicant from paying for the shipment of shoddy goods. The applicant cannot wait until the goods arrive, examine the goods, and then approve payment under the letter of credit.

Available by Payment or Negotiation

Payments under sight letters of credit are available by: payment or negotiation. Banks in the United States typically issue letters of credit which are available by payment with payment made at their counters in the U.S. This means that the exporters bank in the foreign country must send the documents to the issuing bank for examination and payment. Banks in foreign countries commonly issue letters of credit which are available by negotiation with any bank, but are payable only at their counters in the foreign country.

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BANK OF THE WEST

In the event a U.S. exporter receives an L/C which is available with negotiation at any bank; the exporter may present the documents along with the original L/C to the advising bank or its own bank. Many banks are reluctant to negotiate an original L/C if it was not advised through them because the letter of credit may have been amended and the negotiating bank would not be aware of all the amendments. If, after examination, the documents are found to be conforming, then the negotiating bank will courier the draft to the U.S. reimbursing bank or send a teletransmission claim and courier the documents to the foreign issuing bank. The negotiating bank then waits for the reimbursement bank to wire the funds representing the L/C drawing to the negotiating bank. Once the funds arrive by wire transfer from the reimbursing bank, the negotiating bank does the appropriate paperwork to indicate the successful drawing by reducing the L/C liability and credits the customers (exporter) account. If the L/C is negotiable and the documents have discrepancies, the U.S. negotiating bank can: 1. Return the documents to the exporter for correction, if possible and time permitting. 2. Send the documents to the issuing bank on an approval basis. 3. Cable the issuing bank for authority to pay. The U.S. negotiating bank is accepting a higher level of risk on negotiable credits because payment may be made and when the documents arrive at the issuing bank, discrepancies are found and the issuing bank demands return of the funds.

Prompt Decision to Honor or Dishonor Presentation of Documents/Negotiable Credits

The responsibility of the negotiating bank under a letter of credit is to examine documents and make a prompt decision (see next section on time parameters set by UCP article 14.b) to honor or dishonor documents based upon their examination. Since the letter of credit is the legal obligation of the issuing bank, the decision to honor payment upon document presentation rests with the issuing bank or its designated negotiating bank.

Prompt Decision to Honor or Dishonor Presentation of Documents/Payment

If the presented documents are not in compliance with the terms and conditions of the letter of credit, the documents may be sent to the issuing bank on an approval basis. The issuing bank must give notice to the exporters negotiating bank by teletransmission (SWIFT) without delay, but no later than the close of the fifth banking day following the day of receipt of the documents (UCP 600 Article 14(b)). Under the UCP issuing banks have a maximum of 5 banking days to give notice of discrepancies (dishonor) to the exporters negotiating bank. The issuing bank may contact the applicant to determine if the applicant wants to waive the discrepancies and make payment under the letter of credit. If the applicant decides not to waive the discrepancies, the consequences are serious. The issuing bank must give notice to the exporters bank, detailing all discrepancies and stating whether the issuing bank is holding the documents at the disposal of instructions from the exporter or is returning the documents to the presenter. Since the exporter retains title to the goods, the exporter may have to arrange for disposal of the goods, clear customs, and pay demurrage charges. Once the applicant makes the decision not to waive discrepancies, the underlying import/export transaction becomes more costly with the result that the business relationship between buyer and seller will most likely not be a continuing one.

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BANK OF THE WEST

If there are discrepancies in the documents and the exporter wants to be paid quickly, the exporter might e-mail its buyer in the foreign country and request that the buyer contacts its banks letter of credit department to waive the discrepancies. The buyer will always have more leverage over its bank than a U.S. bank sending a SWIFT follow-up to the foreign bank. In addition, an e-mail to the buyer will be much cheaper than a follow-up SWIFT sent by the U.S. bank.

Preventing Discrepancies
In order to prevent discrepancies from occurring when documents are presented under the letter of credit, the exporter should take the following steps as soon as the sale is concluded, but before the letter of credit is opened. 1. E-mail the buyer the terms of the letter of credit, which should conform to the underlying contract of sale between the exporter and importer. 2. After the buyer fills out the letter of credit application, which it will take to its bank, the exporter should insist that the buyer e-mail fax a copy of the letter of credit application to the exporter for its review. It is much cheaper to change the terms of the proposed letter of credit before it is issued; after it is issued the buyer has to pay for amendments to change the terms of the letter of credit. 3. The exporter should make sure that the description of the merchandise as it appears in the letter of credit is stated exactly the same as in the invoice. The exporter must insure that its accounting department (invoice), shipping department (packing list), and freight forwarder (bill of lading) are all aware of the importance of describing the goods in conformance with the L/C, and provide each with a copy of the letter of credit. 4. The exporter should request at least a 14-day period in which to present documents after the shipping date. If the L/C is silent on the presentation period, the period of time that is allowed by Article 14(c) is 21 days. Since late presentation is one of the most common discrepancies, this simple request should alleviate the possibility of a late presentation. Not only does a 14-day (or more) period allow the exporter some extra time in putting together the documents, it also allows for time to fix correctable discrepancies identified by the U.S. negotiating bank. A 21-day period is essential for transferable letters of credit since the process of presenting documents by both the first and second beneficiaries can be time consuming. (If the presentation period is 21 days, the exporter, of course, can present documents as soon as practical in order to speed up the receipt of payment under the L/C.) 5. The exporter should discuss the INCOTERM in the L/C with its freight forwarder to insure that the proper transport and shipping documents can be obtained.

Common Discrepancies
In order to assist the exporter in proofing the documents versus the terms of the letter of credit, we have put together the following list of areas where typical discrepancies occur. The exporter should have a detail-oriented person within the company do this examination and not rely exclusively on the bank or freight forwarder to catch discrepancies. The exporter should make sure that its staff dealing with L/Cs and its freight forwarder have copies of the UCP 600 and have read it!

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BANK OF THE WEST

Draft (Bill of Exchange)
Please see our reference sheet on preparing a draft. Most exporters create a draft template on their PCs and fill in the information accordingly. This, of course, makes it very easy to correct mistakes and prepare a perfect draft. Although drafts are similar to checks, they do not possess any special characteristics such as micro encoding. The easiest method of preparing drafts is to use your PC word processing program. The draft is generally well drawn if: 1. The draft refers to the letter of credit; specifying issuing bank and its L/C reference number and is phrased according to the L/C terms. 2. 3. Amount in words is identical with amount in figures. The draft bears the appropriate endorsement if the payee is the exporter.

4. The exporter signs the draft. 5. Draft tenor (at sight or XXX days after sight or bill of lading date) conforms to the terms of the L/C. 6. Names and/or addresses of drawee and buyer agree with L/C terms. 7. All names are correctly spelled. 8. The amount of the draft correlates to the invoice.

Invoice
1. The invoice indicates that it has been prepared by the exporter and addressed to the buyer (L/C account party). The names of the buyer and seller on the invoice should correspond to the names and addresses of the account party and beneficiary in the L/C. 2. The merchandise description corresponds to that given in the letter of credit; this merchandise description is consistent with the packing list and bill of lading. Documents must be internally consistent with each other. 3. Purchase order numbers, if any, agree with the L/C. 4. The invoice lists the prices and unit prices and various charges/expenses if required by the L/C. 5. A sufficient number of invoices are presented as required by the L/C. 6. The invoice indicates shipping terms, if required by the L/C. 7. If required by the L/C, all listed expense items (merchandise, freight, insurance, and handling) are allowed under the shipping terms. For example, if the shipment were on a CFR basis, but the exporter bills for insurance, then a discrepancy would occur. 8. The amount of ocean freight and/or insurance premium, if listed, agrees with amounts shown on bill of lading and/or insurance document and/or other documents. 9. If the L/C allows partial shipments, the portion of merchandise shipped should not be invoiced out of proportion to the total amount of the L/C.

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BANK OF THE WEST

10. The invoice must show all the clauses, certifications, and/or visa requirements following the terms of the L/C. 11. Shipping marks (quantity, weight, and measurement) on the invoice correlate with the bill of lading, packing list, and other appropriate documents.)

Insurance Documents
1. If L/C requires an insurance certificate, a certificate should be presented; if an insurance policy is required, then a policy should accompany the presented documents. Under Article 28(a) the insurance documents must appear on their face to be issued and signed by insurance company or underwriter or their agent. Under Article 28(b) if the insurance document indicates that it has been issued in more than one original, all the originals must be presented unless otherwise authorized in the L/C. 2. It is blank endorsed, to be in transferable form, provided the L/C does not require the buyer, its bank, or other representative to be the beneficiary of the insurance. 3. It is in the currency of the L/C unless the L/C states otherwise. 4. Under Article 28(f) the insurance must cover the CIF or CIP value plus 10 percent, if that value can be determined. Article 28 should be read in detail to understand the nuances. 5. Merchandise description is consistent with the L/C. It lists the marks and numbers of packages and quantities in accordance with the other documents. 6. It is dated on or before the date of shipment or indicates that coverage is effective as of the date of shipment. 7. It covers merchandise upon the carrying vessel specified in the B/L with shipment from the proper point of loading to the proper destination. 8. It covers risks specified in the L/C. 9. The amount of the insurance premium agrees with that appearing on the invoice, if listed.

Transport Documents
The following articles in the UCP deal with transport documents. This area is one where discrepancies commonly occur. The exporter should carefully review these sections in consultation with its freight forwarder to insure that transport document discrepancies are avoided. The exporter should make sure that its freight forwarder has a copy of the L/C before the forwarder books the freight and obtains the B/L. This should help eliminate obvious discrepancies concerning markings on the B/L, ports of loading and discharge, shipping terms and description of goods. There is a common thread running through most of these articles and that is: the transport document must be signed by the carrier (or in some cases an agent of the carrier) and the signature must identify (usually below it) the name of such carrier (or agent). Read the articles below for an understanding of transport document requirements: (43)

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BANK OF THE WEST

Article 19 Article 20 Article 21 Article 22 Article 23 Article 24 Article 25 Article 26 Multimodal Transport Document Bill of Lading Non-Negotiable Sea Waybill Charter Party Bill of Lading Air Transport Document Road, Rail or Inland Waterway Transport Documents Courier, Post Receipt or Certificate of Posting On Deck, Shippers Load and Count, Said to Contain and charges Additional to freight. Clean Transport Documents Transport Documents issued by Freight Forwarders

Article 27 Article 14(l)

Since this short explanation is not intended to be an all-inclusive bible on this subject, only a few items on Marine Bills have been listed below as examples of items to be aware of.

Bill of Lading
1. A full set of original bills of lading signed by a named carrier, or agent, must be presented, or otherwise accounted for in accordance with the terms of the L/C. It is not acceptable for the B/L to be issued by a Forwarding Agent, except acting as agent for a named carrier. 2. The bill of lading terms are not altered without authentication by the B/L issuer. 3. Bill of lading is not a Charter Party Bill of Lading unless specifically authorized by the L/C. 4. The B/L shows a date of shipment on or before the latest shipment date authorized in the L/C. 5. The B/L does not evidence transshipment, if prohibited by the L/C. 6. The merchandise description is consistent with the commercial invoice. The marks and number of packages, weights, dimensions, and quantities are in accordance with other documents. 7. The B/L is clean; i.e. it does not contain clauses, which expressly declare a defective condition of the goods or their packing. 8. The B/L should be consigned exactly as per the L/C terms and endorsed properly, if required. 9. The notify party is specified on B/L exactly as per the L/C terms. 10. The B/L should show the loading and discharge ports as specified in the L/C. Export letters of credit should be advised to Bank of the West via SWIFT at: Bank of the West Global Trade Services 1977 Saturn St. (SC-MPK-02-G) Monterey Park, California 91755 SWIFT: BWSTUS66LAX Our Export L/C staff can assist you with questions about specific export letters of credit. When you call, please make sure that you have our export L/C advice reference number which starts with EL.

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BANK OF THE WEST FEES CHARGED ON EXPORT LETTERS OF CREDIT

How Are L/C Fees Split Between Importer and Exporter? The usual fee splitting arrangement under letters of credit is for the buyer to absorb the costs incurred in its country for issuing the letter of credit. The costs in the beneficiarys country are usually for the account of the beneficiary. Although this is the typical arrangement, the buyer and seller can arrange to split letter of credit fees in a variety of ways. For example, the buyer could absorb all fees both on its end as well as on the beneficiarys side. Or, the beneficiary could pay for all the bank fees charged in the U.S. except for the reimbursing bank charge (see below). What Types of Fees Does the Beneficiary Typically Pay? Export letter of credit charges include the following:

Advising
Compensates the advising bank for authenticating the L/C, sending the L/C to the beneficiary, and logging the L/C into the banks system.

Payment
Expressed as a percentage of the drawing amount but subject to a minimum charge. Compensates the bank for examining the documents compared to the terms and conditions of the letter of credit.

Discrepancy
Compensates the bank for additional work involved in clearing a discrepancy or arranging for payment with discrepant documents. The advising bank charges for discrepancies and increasingly so does the issuing bank.

SWIFT or Communication Charges to Buyers Bank

These are often incurred when there are discrepancies or to trace a payment. The exporter should try to e-mail its buyer on payment follow-ups because it is cheaper than going through the bank.

Courier & Postage

For sending documents and drafts to the issuing bank/reimbursing bank.

Reimbursement Bank Charge

The issuing bank often selects a U.S. reimbursing bank and the reimbursement charge for L/C drawings is usually paid by the beneficiary. (45)

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BANK OF THE WEST

Bank-to-Bank Reimbursement Arrangements
The issuing bank selects which U.S. bank will provide the dollars for drawings under export letters of credit. This is a specialized service, which some U.S. banks offer foreign banks in order to expedite payments and ease the foreign banks reconcilement work on export L/C reimbursements. Since the issuing bank is selecting the reimbursing bank, the issuing bank is accurately aware of the charge being assessed - usually for the account of the beneficiary. The exporter should be aware that Article 13 the UCP 600 states that the Reimbursing Banks charges should are for the account of the Issuing Bank. However, if the charges are for the account of the beneficiary, it is the responsibility of an Issuing Bank to so indicate in the original credit and reimbursement authorization. Since the reimbursing bank charge should be for the account of the Issuing Bank, the exporter should try to have the buyer absorb that cost.

Controllable Fees
There are two types of fees where the exporter can control its cost: the advising and discrepancy fees. The exporter should instruct the buyer to have the export letter of credit advised directly to Bank of the West. This will save the exporter the cost of having the L/C advised through a first advising bank and then through us. Quite often the issuing bank has an arrangement with a U.S. correspondent bank to have export letters of credit directed through that correspondent bank, which in turn gives the issuing bank a rebate. Thus, the exporter should push for direct advising to us, which is usually possible, if we have SWIFT arrangements in place. If we do not have SWIFT arrangements, we will arrange for the exchange of Swift Authenticators over the SWIFT network. There are instances where the foreign bank is small and has a special arrangement with its preferred U.S. correspondent bank for advising letters of credit. For these cases it may be difficult for the small foreign bank to advise the L/C directly to us. The exporter should read carefully the section on Payment and Discrepancies in order that clean documents are presented, thereby expediting payment and eliminating discrepancy charges.

Buyers Letter of Credit Fees

Exporters often are not fully aware of the credit implications and cost involved for the buyer in opening a letter of credit. In order for the buyer to open a letter of credit with its bank, the buyer must have an appropriate credit facility with the issuing bank. Although the cost of opening a letter of credit varies from country to country, as a rule of thumb, the exporter can estimate that for developed countries the all-in, flat percentage cost for opening and paying a letter of credit will be approximately 3/4% for letters of credit in excess of $100,000 (minimums vary from bank to bank); for developing countries, the issuing and negotiation cost can easily be double the 3/4% with cash margins required to insure that scarce foreign exchange is available. The cost for the buyer in opening its L/C and for subsequent negotiation is a valuable piece of information. The exporter should ask the buyer what the typical charges are in its country and how much its bank charges for opening and negotiating letters of credit. (46)

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BANK OF THE WEST

For the buyer with limited credit availability, there is also the heavy implicit cost of using its credit line for opening a letter of credit. If credit availability is a problem, the buyer often has the letter of credit issued only two to three weeks before the latest shipping date so that the L/C does not unduly clog up the buyers credit line.

Exporter Should Quote Its Price Taking Into Account the L/C Charges
It is always important for the exporter to quote its export selling price knowing all the costs involved: freight, insurance, duty, U.S. bank export L/C charges, and issuing bank opening and payment fees. Obviously, export L/C charges will loom very large indeed on a $10,000 L/C and may significantly impact the profit margin. Please refer to the Export Quotation Worksheet in this handbook for a cost calculation framework.

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BANK OF THE WEST EXPORT L/Cs AS LOAN "COLLATERAL"

Trade Finance Bankers are often asked if a commercial letter of credit in a middleman-exporters favor is acceptable collateral for a Back-to-Back L/C or for a loan to purchase merchandise for export. The assumption is that the export L/C, as the repayment source, is excellent collateral, guaranteeing payment. Before approaching their banker, the exporter should consider the following two key points: A. A letter of credit is not a "guarantee" of payment, but rather a payment mechanism based on performance. The issuing bank has an obligation to pay only if all of the terms and conditions stated in the letter of credit have been met. The extension of credit must be based on the exporters creditworthiness as determined by its bank. If collateral is needed to buttress the credit facility, the collateral will be an asset, which can be liquidated if the underlying transaction does not perform as expected.

B.

In analyzing an export L/C as the primary source of repayment, the following considerations must be fully understood. 1. 2. 3. What is the reputation and strength of the issuing bank? Do they have experience and expertise with L/Cs? When the issuing bank is foreign, are the economic and political risks associated with the country acceptable? Are the terms and conditions of the letter of credit acceptable to the exporters bank? Any ambiguous or non-documentary conditions on which the issuing bank could refuse payment? Will the shipments be insured? How are the goods consigned? Will the exporter be able to obtain all the required documents and comply with the L/C terms and conditions, before the latest shipment and expiry dates? As beneficiary (and borrower), has the exporter demonstrated knowledge and experience with exporting? Has he ever exported using an L/C or heard of the UCP 600? In the normal course of business, does the exporter deal with the same product(s) he plans on exporting? Are the goods involved, a product or commodity with historically volatile prices, which if falling, may induce the buyer to refuse discrepant document? What happens if discrepant documents are presented, the goods are halfway across the Pacific, and because of discrepancies the buyer refuses to authorize payment? How would the bank, making the loan, perfect a security interest in the merchandise or rights to the proceeds of the L/C?

4. 5. 6. 7.

8.

9.

No matter what the answers are, keep in mind that while a commercial L/C may be acceptable to a bank as a primary source of repayment, it cannot be considered collateral to be liquidated to provide a secondary source of repayment. As the ratio of the export L/C to the exporters capital increases so does the risk to the exporters bank.

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BANK OF THE WEST

What alternatives does the undercapitalized middleman-exporter have? If the ultimate supplier is willing to wait for its money until after shipping, a transferable letter of credit or an authorization to pay might be appropriate depending on the circumstances. In the event the ultimate supplier wants its money from the middleman-exporter as a purchase deposit before shipping, the middleman-exporter with no underlying creditworthiness will find such an extension of credit from a bank difficult to arrange. For some middlemen-exporters with a demonstrated record of financial performance, a working capital loan, which is 90% guaranteed by the Ex-Im Bank, may be arranged. This program requires product which is at minimum 51 % U.S. content. Please see our examples of this type of program for a description of the mechanics.

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BANK OF THE WEST CHOOSING A FREIGHT FORWARDER

Asking the questions listed here may assist the new exporter with the process of selecting a freight forwarder. Does the freight forwarder: Demonstrate experience handling your type of product? Provide that extra personal service to enhance your learning curve and demonstrates willingness to work with new exporters? Specialize in the part of the world you are shipping to? Evidence knowledge of the documentation required by your importing customers country? Give regular customer updates on changes in foreign government import regulations, which could affect your export sales? Possess a reputation for customer service and a willingness to provide references? Maintain a network of offices or agents in your buyers countries? Show evidence of financial stability? How long in business? Maintain a facility large enough to handle your business? Carry errors and omissions insurance Sell/provide cargo insurance? Possess a license from the Federal Maritime Commission for the handling of marine cargo? Have a license from the International Air Transport Association for the handling of air cargo? Have a well worn, dog eared copy of the Uniform Customs and Practices for Documentary Credits, ICC Publication No. 600 that he can show you? Have references which vouch for its ability to prepare error free documents under letters of credit?

Provide a printed price sheet of fees for their services?

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BANK OF THE WEST INTERNATIONAL COMMERCIAL TERMS (INCOTERMS)

Trade terms are key elements of international contracts of sale. They identify for the parties what to do with respect to; Carriage of the goods from the seller to the buyer and Customs clearance.

They also explain the division of costs and risks between the parties such as: who should pay the costs of loading and unloading the goods; who is responsible for the risk of loss or damage to the goods and who should take out insurance as a protection against these risks?

INCOTERMS were first published by the International Chamber of Commerce in 1936. Periodically, these rules are amended to bring them in line with current trade practices. Current edition published in 2000 will be superseded by INCOTERMS 2010 which go into effect on January 1, 2011. All sellers and buyers in international contracts want their deals to be completed successfully. Sending goods from one country to another, as part of a commercial transaction, can be a risky business. If, when negotiating their contract, the buyer and seller specifically refer to one of the INCOTERMS, they can be sure of defining their respective responsibilities mitigating a significant portion of the risk. INCOTERMS specifically deal with questions of division of risk of loss or of damage of the goods between the seller and buyer. They do not involve questions relating to title or ownership of the goods. Therefore, the contract between buyer and seller should specifically address when title or ownership transfer occurs. The INCOTERM defines to which place/named point the risks and costs for delivery of goods are borne by the seller and when these risks and costs are transferred to the buyer. They do not determine the moment when ownership is transferred. INCOTERMS do not deal with a breach of contract and its consequences. A breach should be resolved by specific contract provisions. There is an interrelation between the trade term and a breach of contract, since the trade term determines when the goods are considered to have been delivered from the seller to the buyer. INCOTERMS 2000 range from the minimum obligation of the seller (Ex-Works) to the maximum obligation of Delivered terms. The complete range of INCOTERMS 2000 is listed below: Group E Departure Group F Main Carriage Unpaid EXW FCA FAS FOB CFR CIF CPT CIP DAF DES DEQ DDU DDP
(BEING DELETED) (BEING DELETED) (BEING DELETED) (BEING DELETED)

Ex Works Free Carrier Free Along Ship Free On Board Cost and Freight Cost, Insurance and Freight Carriage Paid To Carriage and Insurance Paid To Delivered at Frontier Delivered Ex Ship Delivered Ex Quay Delivered Duty Unpaid Delivered Duty Paid

Group C Main Carriage Paid

Group D Arrival

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BANK OF THE WEST

THE ABBREVIATIONS: E-, F-, C- AND D- TERMS There are four categories of trade terms with the first letter of the term indicating the category. The first group has only one trade term namely Ex - Works (EXW). In the other three groups there are multiple terms. EXW represents the sellers minimum obligation, since the exporter only has to make the goods available at its premises. The letter F signifies that the seller must hand over the goods to a nominated carrier Free of risk and expense to the buyer. Under the F- terms the seller has to arrange any necessary pre-carriage to reach the agreed point for handing the goods to the carrier. It is the buyers responsibility to arrange and pay for the main carriage and associated costs. The letter C signifies that the seller must bear certain Costs even after the critical point where title or ownership has passed. Under the C-Terms the seller arranges and pays for the main contract of carriage and in some instances associated costs including insurance coverage. The letter D signifies that the goods must arrive at a stated Destination. Under the D-Terms the seller undertakes to arrange and pay for the main contract of carriage and associated costs including insurance. C-Terms differs from D-Terms as the seller fulfills its obligation by shipping the goods from its country under the C-Terms. Under the D-Terms the seller fulfills its obligation only when the goods reach a stated destination. INCOTERMS 2010 will replace INCOTERMS 2000 starting January 1, 2011. The standard delivery terms and conditions will decrease from 13 to 11, 9 remaining unchanged, 4 being eliminated and 2 new additions.

Changes in INCOTERMS 2010

Starting in 2011, the following standard delivery terms will be used: EXW FCA CPT CIP DAT (new delivery term) DAP (new delivery term) DDP FAS FOB CFR CIF Ex Works Free Carrier Carriage Paid To Carriage and Insurance Paid Delivered At Terminal Delivered At Place Delivered Duty Paid Free Alongside Ship Free On Board Cost and Freight Cost, Insurance, and Freight All types of transportation All types of transportation All types of Transportation All types of transportation All types of transportation All types of transportation All types of transportation Water Transport Water Transport Water Transport Water Transport

INTERNATIONAL CHAMBER OF COMMERCE GUIDE TO INCOTERMS IS AVAILABLE FROM:

ICC BOOKS (USA) (www.iccbooksusa.com) Tel: (212) 703-5066; Email: iccbooks@uscib.org The Guide is a detailed examination of each INCOTERM and should be required reading for any Company engaged in international trade.

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BANK OF THE WEST FINANCING FOREIGN SALES

THE EXPORT USANCE LETTER OF CREDIT

An exporter in the United States can offer terms to an overseas buyer through the usance (time) letter of credit mechanism. An export letter of credit may call for the beneficiarys drafts to be drawn at a certain number of days after sight or after the bill of lading date. Typically, the drafts are drawn on the exporters bank. Once the buyers bank has accepted the documents under the letter of credit as a conforming drawing, the accepted draft becomes a bankers acceptance. The advantages of the usance (time) letter of credit are:

The exporter can give the foreign buyer the option of financing its trade cycle at the bankers acceptance rate in the United States. For buyers in developing countries, the bankers acceptance rate is usually a much better rate than they can access in their own country. The exporters credit risk is the U.S. bank or foreign bank on which the draft is drawn as an irrevocable undertaking to pay the exporter at maturity. In many cases, the exporter can finance the foreign sale at a better rate under the usance letter of credit than under its own bank line of credit based on Prime. The exporter can extend financing terms without using its own line of credit.

Example
A Mexican company, Serfinsa, opens a $250,000 time letter of credit with its bank, Citimex, in favor of the beneficiary in the United States, Fulcrum Industries. The time letter of credit calls for the draft to be drawn on Bank of the West at 90 days after the bill of lading date. Since the draft is drawn on Bank of the West, they are taking the credit risk of Citimex. Thus, it is important for the exporter to check with Bank of the West before the letter of credit is issued to determine if Bank of the West has sufficient availability under its credit limit to Citimex to accept this transaction. (An alternative to having the draft drawn on Bank of the West is to have the draft drawn on Citimex. The exporter thus upgrades the credit risk from that of his buyer to that of the buyers bank. Bank of the West no longer has credit exposure to Citimex under this alternative.) The goods are shipped on Tuesday, April 4. Fulcrum presents the documents required by the letter of credit to Bank of the West on April 10, accompanied by a 90-day draft maturing on Monday, July 3. Bank of the West examines the documents; finds two discrepancies, and sends the documents to Citimex in Mexico City by courier. On April 14 Citimex notifies Bank of the West by an authenticated SWIFT that the buyer has waived the discrepancies, enabling Citimex to give Serfinsa the title documents and obligating Citimex to pay Bank of the West on July 3. This discrepancy waiver in turn enables Bank of the West to stamp the draft drawn on it as accepted, thereby creating a bankers acceptance.

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BANK OF THE WEST

Once the bankers acceptance has been created, the exporter has two choices: Wait until July 3 to get the $250,000, knowing that its credit risk is now Bank of the West. If this option is picked, Fulcrum will be charged a per annum commission of 1.5% ($833.33) representing Bank of the Wests price for accepting Mexican bank risk for 80 days. On April 14, discount the draft with Bank of the West at the bankers acceptance discount rate of 6.4% plus the commission of 1.5%. In this example, Fulcrum would be discounting the bankers acceptance for the time period of 80 days left until maturity at a rate of 7.9% based on a year of 360 days, giving a total discount of $4,388.88. Fulcrum would receive the net proceeds of $245,611.12.

A significant advantage to Fulcrum Industries is that Fulcrum can finance this foreign receivable at a cheaper rate than under its bank line of $2 million, priced at one percent over Prime (9.5%). In this example, Fulcrum is saving 2% and does not have to utilize its own bank line to finance the export sale. The Mexican buyer could not receive such advantageous pricing from Citimex based on its credit rating. If it were financing this transaction with Citimex under its Peso denominated line of credit, it would be paying 16% to 18%. However, Serfinsa does have the commission costs of opening the letter of credit as well as the 25% cash margin requirement required by Citimex for credit and foreign exchange reasons.

Bankers Acceptance Discount Rates

These rates vary with the amount and tenor; the larger the amount and the smaller the number of days, the less the rate will be. Bankers acceptance rates are quoted in the third section of the Wall Street Journal under Money Rates for periods of 30, 60, 90 and 180 days. These quoted rates are for million dollar transactions and represent the best rates. Since the bankers acceptance discount rate is approximately equal to the banks cost of funds; the all-in discount rate includes the commission, which covers the credit risk and operational overhead assumed by the U.S. bank. The U.S. bank can, in turn, re-discount or sell these bankers' acceptances to investors in the money markets, thereby providing a liquid source of funding for the bank.

Bankers Acceptance Rules

The rules for bankers acceptances were established by the Federal Reserve Bank. Although bankers acceptances can be created for the domestic storage of commodities, they are most commonly created to finance current (within 30 days of the bill of lading date) import and export transactions. Bankers acceptances can be automatically created within the structure of a time letter of credit or they can be requested by an importer or exporter from its bank to finance its trade cycle up to six months. The tenor (number of days) of the acceptance should match the cash conversion cycle from inventory, to accounts receivable, to cash.

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BANK OF THE WEST LETTERS OF CREDIT- ADVISED vs. CONFIRMED

The letter of credit transaction usually involves two banks: the buyer's bank issuing the letter of credit and a bank in the seller's country, which advised the letter of credit to the beneficiary. The advising bank may also assume the role of confirming bank. Whether advising and/or confirming, the seller's bank assumes certain responsibilities.
ADVISING

An advising bank acts as the agent of the issuing bank. The function of the advising bank is to take reasonable care to verify the authenticity of credits received and then accurately transmit them to their beneficiaries. When advising a letter of credit, the bank assumes no other liability. On receipt of the documents for examination and payment, the advising bank will pay the seller only if it has received good funds from the issuing bank, even if it was specifically nominated as paying bank in the letter of credit.
CONFIRMATION

By confirming a letter of credit, the advising or another bank assumes the same responsibilities as the issuing bank, including the obligation to pay against presented documents if they are in order and all of the letter of credit terms are met. In effect, the beneficiary has the individual promise of two banks to pay against conforming documents.
HOW IS A LETTER OF CREDIT CONFIRMED?

When negotiating the terms of sale, the seller would require a letter of credit requesting the advising bank to add its confirmation. The buyer includes this request when submitting the application for L/C issuance to his bank. In most instances the issued credit states: "Please advise beneficiary adding your confirmation" or words to similar effect. Note: This is a request, not a requirement. The advising bank for various reasons may decline to add its confirmation and simply advise the L/C without engagement on its part. When adding confirmation, typical language included in the cover letter would be, "We hereby confirm this credit and thereby undertake that all drafts drawn under, and in strict compliance with the terms stated therein (and any further terms stated herein) will be duly honored on presentation and delivery of documents as specified, if presented, at this office on or before the expiry date."
WHY REQUEST CONFIRMATION?

The beneficiary may have concerns about the political or economic stability of the buyer's country, or the strength and reputation of the issuing bank. Confirmation by a bank known and convenient to the seller promotes the commercial utility of letters of credit. Also in the event of a dispute, jurisdiction will be determined by the confirming bank's location.

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BANK OF THE WEST AUTHORIZATIONS TO PAY

(Assignment of Proceeds)

WHAT IS AN AUTHORIZATION TO PAY?

Under a documentary credit, an authorization to pay (ATP) is a means by which the beneficiary of the letter of credit provides an irrevocable undertaking to another party (the supplier of the merchandise) that a specified portion of the proceeds of the letter of credit will be paid to the supplier (designated payee) if, and when, the letter of credit is negotiated and paid. An A.T.P is initiated by the beneficiary of the letter of credit, acknowledged/accepted by the bank, and then delivered by the bank to the designated payee. ATPs under letters of credit are often erroneously called Assignments of Proceeds.

HOW IS IT USED?
At times, the beneficiary of an export letter of credit does not have adequate funds to purchase merchandise, or the supplier is unwilling to extend sufficient credit. In this situation, the supplier may be willing to extend credit with assurance from the advising or confirming bank that for a specified letter of credit, it holds irrevocable instructions to pay the supplier for the merchandise. Banks acknowledging authorizations to pay, agree to pay the supplier only if: 1) documents are presented under the related letter of credit, and 2) the bank receives funds from the issuing bank. Because of this, suppliers usually accept authorizations to pay only from parties with whom they have had a satisfactory ongoing relationship.

HOW DOES AN AUTHORIZATION TO PAY DIFFER FROM A TRANSFER?

Unlike a transfer, the designated payee is not a beneficiary of the letter of credit and may not perform the obligations of the beneficiary, nor draw on the letter of credit. The designated payee must trust the beneficiary to ship the merchandise and present documents under the L/C to the bank, for only then will the designated payee have a right to the proceeds at the time of payment. Also, ATPs are only used domestically and need not be authorized in the letter of credit text.

WHO PROCESSES AUTHORIZATIONS TO PAY?

Inquiries about obtaining an ATP under a letter of credit should be directed to the advising bank which sent the credit to the beneficiary. ATPs are generally processed by the advising bank's Global Services Department with policies varying from bank to bank. The beneficiary's domestic branch of account will only be asked to verify the customer's signature as beneficiary of the L/C. Questions about ATPs under credits advised by Bank of the West should be directed to Global Trade Services - Operations at (888-600-TRADE).

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BANK OF THE WEST TRANSFERABLE LETTERS OF CREDIT

WHAT IS A TRANSFERABLE LETTER OF CREDIT?
A transferable letter of credit is one, which specifically states that it is transferable. This will only occur if the applicant for the letter of credit (buyer) agrees. In a transferable letter of credit, the rights and obligations of the beneficiary are transferred to another party, usually a manufacturer or wholesaler. Transfer may be either full or partial.

WHY TRANSFER AN L/C?

Most transfers involve a seller who, as beneficiary of the letter of credit, has a pending sale, but is unable to purchase the merchandise from the manufacturer on open account. Export brokers most often use transferable L/Cs. Transferring a portion of the export L/C to the manufacturer allows the broker to leverage the buyer's banker's credit by providing the manufacturer with assurance of payment if the manufacturer performs under the transferred L/C terms and conditions.

WHAT CRITERIA APPLY TO TRANSFERS?

Transfer of letters of credit is governed by Article 38 of the UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS, ICC Publication No. 600 (2007 Revision) which states that banks are under no obligation to transfer a credit except to the extent and in the manner expressly consented to. Further, the transferring bank must be specifically nominated in the letter of credit as the bank authorized to effect the transfer. Transfer criteria vary from bank to bank, but may include such requirements as: The transferor being a customer of the transferring bank. "Negotiation" of the credit being restricted to the transferring bank. The issuing bank being a correspondent of the transferring bank. All terms and conditions of the credit being acceptable to the transferring bank.

WHAT IF THE L/C DOES NOT MEET THE BANK'S TRANSFER CRITERIA?
The bank always retains the right to decline a transfer request. It may consent if certain terms and conditions of the letter of credit are amended to meet its requirements. Any amendment to a letter of credit is subject to agreement of the buyer, the buyer's bank, and the beneficiary who is requesting the transfer. Banks retain the right to decline any transfer request.

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WHAT CAN BE CHANGED WHEN TRANSFERRING A LETTER OF CREDIT?
Article 38 of the UCP 600 limits changes to the following: The L/C amount may be reduced. Unit prices may be reduced. The expiry and latest shipping dates may be curtailed. The time period after the date of shipment for presenting documents to the bank may be curtailed. The name of the beneficiary is substituted for the name of the applicant (buyer), but if the applicant's name is required to be stated in any document other than the invoice, this requirement must be adhered to. If an insurance document is required, the coverage may be increased to provide coverage as required by the original L/C. The place of payment or negotiation may be changed to the location of the transferee.

WILL THE SUPPLIER AND THE BUYER BE ABLE TO IDENTIFY EACH OTHER?
Probably so, even if the bills of lading do not give the buyer as "consignee" and the "notify party" is shown as the buyer's customs broker. Also, the entire supplier's documents (except for invoice and draft) are forwarded to the buyer through their banks, and a packing list for instance is sure to have the supplier's name and address. Remember: The second beneficiary ships the goods directly to the buyer. First beneficiary has no control over catalogs or price lists which may be inserted in the cartons of goods.

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BANK OF THE WEST STANDBY LETTERS OF CREDIT

WHAT IS A STANDBY LETTER OF CREDIT?
A standby letter of credit is similar to a commercial letter of credit used for import/export transactions in that a bank substitutes its credit worthiness for that of its customer. The commercial letter of credit facilitates trade through the use of documents evidencing performance and drafts. The standby letter of credit, however, often represents an obligation of the issuing bank to the beneficiary to 1) repay money borrowed by or advanced to or for the account party, or 2) make payment on account of any indebtedness undertaken by the account party, or 3) make payment on account of any claimed default by the account party in the performance of an obligation. Note that in each of these cases, payment is effected against the beneficiary's claim that default has occurred. In no case does the issuing bank agree to guarantee the completion of any project or contract, nor is it bound to make determination of fact regarding the underlying transaction. The bank's liability is financial only.

WHAT ARE THEY USED FOR?

TRADE SUPPORT When a trading relationship is established between a buyer and a seller on either a "cash in advance" or "open account" basis, a standby can be used as financial security. In these situations, payments are made directly between buyer and seller, with seller having recourse to the issuing bank in the event of buyers non-payment. BID BONDS Contracting parties involved in sizeable projects frequently request contractors bidding on the project to post a bond or standby letter of credit for a percentage of the contract amount. These are used for the bidding process only, and assure the contracting party that the contractor they selected will honor the original bid. ADVANCE PAYMENT BONDS When the contractor, who has been awarded the project, begins work, an advance payment may be required for materials, start up costs, or general working capital. The contracting party generally requires a bond or standby letter of credit to ensure that the advance payment will be used for the project. In the event of contract default, the payment can be recovered from the bank, which issued the standby credit. These standby letters of credit can be issued to progressively decrease in amount through the life of the credit. PERFORMANCE BONDS Throughout the life of the project, the contracting party is interested in ensuring that the project will be completed in accordance with its terms and conditions. A standby credit may be required to provide financial reimbursement in the event of default by the contractor. These are generally designed to decrease in amount over the life of the project.

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BANK OF THE WEST

OTHER USES INCLUDE:
to back up equity contributions to secure earnest money or liquidated damages to secure promissory notes to secure rental & lease transactions in lieu of appeal & attachment bonds in settlement of civil litigation credit rating enhancement for debt securities coverage of airline tickets for travel agencies installment payments & sales

WHO DETERMINES THE LANGUAGE IN A STANDBY?

Customers, as applicants for a standby letter of credit, are encouraged to ask the beneficiary what language they want in the standby. Most beneficiaries, who regularly accept standbys, will provide the applicant with an example of their format. Before the standby is issued, the customer, bank, beneficiary, and confirming bank, if any, should all agree on the language to be included. This prevents delays and saves amendment expense.

WHEN/HOW IS PAYMENT MADE?

To be paid, the beneficiary must comply with the standby's terms and conditions and submit the required documents. When paying, the bank is interested only in the conforming documents required by the letter of credit. In no instance would a bank investigate the accuracy or correctness of any statement made by the beneficiary. Also, the bank is not interested in the underlying transaction's terms and conditions. . Standby credits can be governed by the same rules as commercial letters of credit, the UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS, International Chamber of Commerce Publication No. 600, 2007 Revision, (UCP600). The applicant can also elect to have standby credits covered by International Standby Practices 1998 (ISP98) also issued by the International Chamber of Commerce as Publication No. 590. Since the ISP98 is written specifically for Standby Letters of Credit, it is the preferred set of rules.

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BANK OF THE WEST STANDBY L/C PROCEDURES

Basics of Standby Letters of Credit
Banks in the United States historically have not been allowed to issue guarantees. U.S. banks issue standby letters of credit, which act as a substitute in part for a guarantee. The drawing under the standby letter of credit is triggered by the beneficiarys statement of nonperformance of the underlying transaction. Under letters of credit, banks only deal with documents. Banks do not research the truth of the non-performance (i.e. unpaid invoices, late delivery of product, etc.) nor do they make determinations of fact. The trigger language in the standby is the critical element of the standby letter of credit, and it is basically a statement by the beneficiary that non-performance has occurred. Most beneficiaries, who regularly accept standbys, have their own preferred text for the standby letter of credit. The applicant and the beneficiary of the letter of credit should give Global Trade Services sample language for the L/C as it relates to the underlying transaction, keeping in mind that the detailed specifics in any underlying contract should not be repeated in the letter of credit.

Drafting the L/C

There are at minimum three parties who must agree on the text of the letter of credit: the applicant, the beneficiary, and the bank. Once we receive sample language, we will draft the L/C using your basic language to conform to the rules of letters of credit, the UCP 600 or ISP 98, and our own internal requirements. We will give you an attachment to accompany your completed Application and Agreement for Standby Letter of Credit. This attachment is essentially a mirror of the letter of credit we would issue. IT SHOULD BE REVIEWED CAREFULLY TO SEE THAT IT MEETS ALL THE PARTIES REQUIREMENTS AND MATCHES THE PARAMETERS OF THE UNDERLYING TRANSACTION, WITHIN THE STRUCTURE OF THE UCP 600 OR ISP98. It is preferable to e-mail the attachment to the beneficiary before the letter of credit is issued to obtain the beneficiarys concurrence that the text is satisfactory. It is better to find out if the beneficiary has any objections prior to the standby L/C being issued; after the L/C is issued, changes to the L/C text must be done through the costly and time consuming process of amendments to the letter of credit.

Text is Tailor-Made/Timeliness of Drafting and Issuance Process

Since the text is custom drafted for each standby letter of credit, sufficient time must be allowed: to draft the text, obtain your consent, the approval of the beneficiary, and make any agreed changes. (61)

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BANK OF THE WEST

The time frame must also take into account your internal approvals as well as the banks credit approval process. The final steps, which also take time, are the preparation of the actual L/C by Global Trade Services; careful proof reading of the text, and the sending out of the L/C by courier to the beneficiary or by authenticated SWIFT to the beneficiarys advising bank. We recommend that at least ten (10) business days be allowed for the entire standby letter of credit process, from drafting to receipt by the beneficiary of the issued L/C.

Credit Approval
The issuance of a standby letter of credit requires specific credit approval for this type of transaction, especially with regard to the length of time (validity) the standby L/C will be outstanding. Many standby letters of credit involve a validity in excess of a year, which exceeds the maturity of the annual line of credit. This may be solved by an automatic extension clause, which gives the bank the option of extending or not extending the standby L/C.

Procedural Mechanics
On the Standby Letter of Credit Application form, where there is a large blank space, you should type see attached referring to the attachment. In the space on the Application for the beneficiarys address, please use a street address (not a P.O. Box) because we, or the advising bank, typically send out the standby letter of credit by courier. It is also good practice to include under the beneficiarys address attention details such as name of the department at the beneficiarys company as well as phone/fax numbers. These communication details are especially important for communicating on extension notices for standbys with automatic extension clauses. The company should sign the Application and the Attachment. Your Bank of the West Relationship Manager (RM) must also sign the Attachment and the Application. Once your RM has signed the Application and Attachment, the Attachment and Application may be faxed or e-mailed to Global Trade Services. Your RM then sends the original Application and Attachment to us through the mail. Your RM should confirm with Global Trade Services (323-7276339) that the application has been received in good order and that credit authorization is in place with Bank of the West, Commercial Lending Services. Questions about the issuance of the letter of credit should be directed to the Standby Issuance Section at 323-727-6339 or 6304.

Fees
Compensation for the credit risk is set by your RM and is reflected in the per annum percentage issuance fee paid at the time of issuance. The minimum fee and processing charge, as well as other out-of-pocket expenses, are detailed in our International Schedule of Fees and Charges. Depending on the complexity of the standby and the language supplied by you, there may be special handling/consultation fees assessed for the drafting of the standby letter of credit.

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BANK OF THE WEST EXPORT FINANCING ASSISTANCE

EXPORT-IMPORT BANK OF THE UNITED STATES www.exim.gov
Ex-Im Bank programs require that the goods have a certain amount of U.S. content depending on the program used, and not be used for military or nuclear purposes. Ex-Im Bank has a variety of programs, which finance the foreign buyer, usually with the guarantee of the buyers bank, or finance the exporter who needs working capital to manufacture or procure the needed goods to export. Bank of the West has delegated authority under the Working Capital Guarantee Program, which authorizes the Bank to approve credit facilities without prior approval from Ex-Im Bank, thus saving time for the exporter/applicant. EXPORT-IMPORT BANK of the United States
Chicago Regional Office 200 W. Adams St., Suite 2450 Chicago, IL 60606 (312) 353-8081 (312) 353-8098 Fax Western Regional Office 3300 Irvine Ave, Suite 305 Newport Beach, CA 92660 (949) 660-1341 (949) 660-9553 Fax Southwest Regional Office 1880 South Dairy Ashford II, Suite 405 Houston, TX 77077 (281) 721-0465 (281) 679-0156 Fax

Information requests from Small Business Exporters: (800) 565-3946, select option 2.

U.S. SMALL BUSINESS ADMINISTRATION www.sba.gov

Los Angeles District Office 330 N. Brand, Suite 1200 Glendale, CA 91203 Phone: (818) 552-3210 Fax: (818) 552-3260 Sacramento District Office 650 Capitol Mall, Suite 500 Sacramento, CA 95814 Phone: (916) 930-370? Fax: (916) 930-3737

The SBA has a program to help small businesses obtain working capital to complete their export sales. The Export Working Capital Program (EWCP) can support single transactions or multiple export sales. Under the program, SBA can guarantee up to 90% of a private sector loan up to $1,000,000. Collateral may include inventory, insured foreign receivables, domestic receivables, and assignment of export contract or letter of credit proceeds. Questions on the program may be directed to the U.S. Export Assistance Center for the Centers for International Trade Department (see below) or you may call SBAs Washington office for International Trade at (202) 205-6720.

U.S. EXPORT ASSISTANCE CENTER ("USEAC")

The U.S. Department of Commerce Commercial Service has established export assistance centers throughout the United States to provide support for export-ready companies. The USEAC staff will guide firms that are not yet export-ready to local export development partners for basic education, training and assistance most relevant to their needs. For the office in your area please go to: www.buyusa.gov

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BANK OF THE WEST

CENTERS FOR INTERNATIONAL TRADE DEVELOPMENT (CITD)
Californias Centers for International Trade Development provide value added assistance to help expand businesses internationally. Serving both importers and exporters, they provide free or low cost services to help businesses and entrepreneurs expand their international business through individualized assistance. For further information go to: www.citd.org.

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075-05325 (Rev 8-10-10)

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