Seulki Lee

Professor / Ph.D.

Prof. Seulki Lee. Copy Right

 ❖ Means of Payment

CWO (Cash With Order)

Cash COD (Cash On Delivery)

CAD (Cash Against Document)

D/A(Draft against Acceptance)

Collection
Means of
D/P(Draft against Payment)
Payment

At sight L/C
Letter of
Credit
Usance L/C

Factoring
Special
Forfaiting

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 ❖ Letter of Credit

Flows of L/C Transaction

Reimbursing Bank
payment
send documents
Paying Bank Negotiating Bank
L/C
issuing bank Advising Bank

Confirming Bank

L/C Supplier 1
Advising Negotiation
Supplier 2

Supplier 3

Export Seller Local L/C

Buyer

Shipping S/R
House B/L

Forwarder
D/O
Money Flow
Pre-alert
Goods Reserve
received Forwarder Master B/L Cargo Flow
Space
Docs & Info Flow

Carrier

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 ❖ Letter of Credit

Concerned Parties in L/C

Reimbursing Accepting
Bank Bank

Paying Negotiating
Bank Bank

Letter of Credit
Issuing Advising
Bank Bank

Applicant Beneficiary

Confirming
Bank

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 ❖ Letter of Credit

Classification of L/C

Revocable L/C

Irrevocable L/C

Transferable L/C

Non-transferable L/C

At sight L/C
General
L/C Usance L/C

Confirmed L/C

Unconfirmed L/C

Documentary L/C

Clean L/C
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 ❖ Letter of Credit

Classification of L/C

Revolving L/C

Back to Back L/C

Escrow L/C

Tomas L/C ➭ barter trade L/C

Special
L/C
Stand-by L/C ➭ for Performance Bond

Blank L/C ➭ amount only

Packing Credit L/C ➭ advanced payment to the beneficiary

Extended L/C ➭ packing credit + revolving

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 ❖ Letter of Credit

Classification of L/C

At Sight L/C
Negotiation ➭ Shipper’s Usance
(Bank decide) Negotiation L/C Seller’s Usance
➭ buying B/E from
beneficiary Usance L/C
Buyer’s Usance Oversea’s
With B/E Banker’s
Usance
Banker’s Usance Domestics
by Payment Types

Banker’s
Usance

➭ pay on due date ➭ Issuing bank will take responsibility as long as

Confirmed L/C the terms of L/C have been compiled
Acceptance L/C
Unconfirmed L/C ➭ seller takes the risk that payment will not be made

Payment L/C ➭ at sight without B/E

With B/E ➭ discount

Without B/E
Honoring Without B/E ➭ no discount
(Bank follow) Deferred L/C ➭ deferred without B/E

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