Green Economy | G20 MARKET

Export, Import & Letter of Credit (L/C)



LETTER OF CREDIT

A letter of credit is a promise to pay. Banks issue letters of credit as a way to ensure sellers that they will get paid as long as they do what they have agreed to do. Letters of credit are common in international trade because the bank acts as an uninterested party between buyer and seller. For example, importers and exporters might use letters of credit to protect themselves. In addition, communication can be difficult across thousands of miles and different time zones. A letter of credit spells out the details so that everybody’s on the same page.

STEPS INVOLVED

1. The exporter and importer sign a bill of sale contract.
2. The importer applies to his bank, the issuing bank, to open a letter of credit.
3. The issuing bank sends the advice of the credit to the advising bank.
4. The exporter is advised of the credit.
5. Following shipment of the goods, the exporter presents the documents to the advising bank (the paying agent).
6. After checking the documents and confirming that they agree with the letter of credit terms, payment is made to the exporter. At the same time, the advising bank sends the documents to the issuing bank and requests reimbursement for the letter of credit amount plus the advising bank’s fees and expenses.
7. The issuing bank sends the documents to the importer and debits his account for the letter of credit amount plus the fees and expenses of the banks involved.

IMPORT & EXPORT FACILITY

The bank will only issue a letter of credit if they know the buyer will pay. Some buyers have to deposit (or already have) enough money to cover the letter of credit, and some customers use a line of credit with the bank. Sellers must trust that the bank issuing the letter of credit is legitimate.

Import Services:
– Documentary Credit
– Documentary Collection
– Import Financing
– Shipping Guarantees
– Import Tax Payment
– Import Direct

Export Services:
– Documentary Credit
– Documentary Collection
– Import Financing

Should you need any Import, Export or L/C facility, please do not hesitate to contact us!



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