PrePre-Pay

Letter of Credit

Documents Against Payment

Documents Against Open Acceptance Account

Agency

Client

Who Should Take the Risk?

3

1) Choose Method of Payment a. Establish country risk criteria b. Standards for particular buyers Payment history Size of transactions/credit limit Credit History

2) Set Policies for Each Method a. Cash in advance wire transfers Vs. check b. Open account discount policy, controls etc. c. Documentary Collections payment at sight d. Letters of Credit Policy Letter L/C Checklist 3) Enforce the Policies That You Set

Agency

Client

Receiving Bank

Issuing Bank
6

A Letter of Credit is:

A substitution of the bank s credit for the buyer s A bank s promise to pay upon the satisfactory compliance with the L/C s terms and conditions by the L/C s Beneficiary

Revocable - Irrevocable Confirmed - Unconfirmed Back to Back Revolving Red Clause

Agency

Client

Issuing Bank Receiving Bank

9

Agency

Client

Issuing Bank Receiving Bank Intermediate Bank

10

DRAFT
At

Sight
ABC Exporter

January 5

20 00

Pay to the order of

8,020.00

Eight Thousand Twenty Dollars and 00/100

Dollars

Drawn under Documentary Credit No. M0491110NS00616, of the Standard Chartered Bank, Seoul, Korea, dated September 17, 1999

To

Standard Chartered Bank New York, NY

ABC Exporter

11

Draft Transport Document (b/l) Commercial invoice Insurance policy or certificate Packing list Certificate of origin, weight Beneficiary statements

12

CHECK IT CAREFULLY !!!

 Review it ASAP  L/C mirror sales contract  Can you perform  Can you provide ALL the documents

13

Latest shipment date Expiry date Partial shipments Merchandise description Can you provide documents required

14

Known bank Known country risk Known customs and language

Unknown bank (??) Country stability Currency stability Foreign laws and usages

15

Confirmation

Issuing Bank

Confirming Bank
16