Letter Of Credit (L/C)

L/C is the most used payment term in International Trade and I'll be fairly specific on this topic. L/C is a perfect procedure to equally protect your interests and your buyer's interests. Using L/C as a
term of payment, you risk almost nothing and at the same time it ensures the buyer that goods are shipped before the payment has occurred. However, you only will be paid if all terms stipulated in
the L/C are met and all documents specified in the L/C strictly comply with agreed conditions and are presented in time.

1. The Applicant and the Beneficiary negotiate terms and conditions of the L/C
2. The Applicant applies to the Issuing Bank to issue the L/C
3. The Issuing Bank issues the L/C and forwards it to the Advising Bank
4. The Advising Bank checks the apparent authenticity of the L/C and advises the L/C to the Beneficiary
5. The Beneficiary checks if the L/C complies with the commercial agreements and if all terms and conditions specified in the L/C can be satisfied and ships the goods
6. The Beneficiary assembles the documents specified in the L/C, checks the documents for discrepancies with the L/C, draws the draft and presents the draft and the documents to the Advising Bank
7. The Advising Bank bears the draft and the documents against terms and conditions of the L/C and forwards them to the Issuing Bank
8. The Issuing Bank checks if the documents comply with the L/C and makes a payment immediately (if the L/C is available by sight) or on a certain date (if L/C is available by deferred payment)

1. The Applicant and the Beneficiary negotiate terms and conditions of the L/C
2. The Applicant applies to the Issuing Bank to issue the L/C
3. The Issuing Bank issues the L/C and forwards it to the Advising Bank
4. The Confirming Bank confirms the L/C to the Advising Bank
5. The Advising Bank checks the apparent authenticity of the L/C and advises the L/C to the Beneficiary
6. The Beneficiary checks if the L/C complies with the commercial agreements and if all terms and conditions specified in the L/C can be satisfied and ships the goods
7. The Beneficiary assembles the documents specified the Issuing Bank in the L/C checks the documents for discrepancies with the L/C and presents them to the Advising Bank
8. The Advising Bank bears the documents against terms and conditions of the L/C and forwards them to the Confirming Bank
9. The Confirming Bank checks if the documents comply with the L/C and makes payment immediately (if the L/C is available by sight) or on a certain date (if L/C is available by deferred payment)
10. The Issuing Bank reimburses the funds to the Confirming Bank immediately after the payment