How to settle a letter of credit

The settlement process for this certificate is as follows:

1.Bi Xunkou submits an application to the issuing bank.

Pay the issuance deposit and corresponding bank charges.

2.The issuing bank examines the application for issuance, and if there is any inappropriateness, the issuing bank requires the applicant to check the contract and propose amendments, and then issues the L/C according to the revised application for issuance. and transfer the letter of credit to the advising bank.

3.The advising bank passes the letter of credit to the exporter.

4.The beneficiary (exporter) examines the letter of credit, proposes to change the letter of credit if there is a problem, no problem, arranges production and stocking, shipment, preparation of documents and bills of exchange, submission of bills of lading and other freight documents, and negotiates with the negotiating bank within the time limit specified in the letter of credit and the validity period of the letter of credit.

5.The negotiating bank reviews the documents, notifies the beneficiary of the modification in time if there is any problem, and advances the money to the beneficiary if it is correct.

6.The negotiating bank forwards the bills of exchange and documents to the issuing bank or its designated paying bank.

7.After the issuing bank examines that there is no error, it will pay the negotiating bank.

8.The issuing bank notifies the issuing applicant (importer) to pay the redemption order.

9.The applicant for the issuance of the certificate pays to obtain the documents to pick up the goods from the carrier (shipping company).

Extended information] Letter of credit refers to a written certificate issued by the bank to the exporter (seller) at the request of the importer (buyer) to guarantee the responsibility of paying the purchase price. In the L/C, the bank authorizes the exporter to issue a bill of exchange not exceeding the prescribed amount under the conditions specified in the L/C, with the bank or its designated bank as the payer, and to attach the shipping documents as required, and to collect the goods at the designated place on time.

The general procedure for payment by letter of credit is:

1) The parties to the import and export shall enter the sales contract.

, clearly stipulate that payment shall be made by letter of credit.

2) The importer submits an application for issuance to the bank where it is located, fills in the application for issuance, and pays a certain deposit or provides other guarantees, and asks the bank (issuing bank) to issue a letter of credit to the exporter.

3) The issuing bank shall issue a letter of credit in favour of the exporter according to the content of the application, and notify the exporter of the L/C through its ** bank or correspondent bank (collectively referred to as the advising bank) in the exporter's location.

4) After the exporter ships the goods and obtains the shipping documents required by the L/C, he shall negotiate the payment for the goods to the local bank (which can be the advising bank or other banks) according to the provisions of the L/C.

5) After the negotiating bank negotiates the payment, the negotiating amount shall be indicated on the back of the L/C.

1. Spot payment: 1. The beneficiary will send the documents to the paying bank. 2. The bank verifies the documents and the terms of the letter of credit, and pays the beneficiary after they are in conformity. 3. If the bank is not the issuing bank, it shall send the documents to the issuing bank for compensation in the manner agreed in advance.

2. Deferred payment: 1. The beneficiary sends the documents to the bank that undertakes the deferred payment. 2. After the bank verifies that the documents are consistent with the terms of the letter of credit, the bank shall make payment according to the maturity date that can be determined by the letter of credit.

3. If the bank is not the issuing bank, it shall send the documents to the issuing bank for compensation in the manner agreed in advance.

3. Acceptance of the bill of exchange: 1. The beneficiary shall send the documents and the usance draft issued to the bank to the bank (acceptance bank) that handles the letter of credit. 2. After the bank verifies that the documents are consistent with the conditions of the letter of credit, the bill of exchange will be accepted and returned to the beneficiary.

4. Negotiation: 1. The beneficiary shall, in accordance with the provisions of the L/C, send the documents together with the demand or deferred draft issued to the payer specified in the L/C to the negotiating bank. 2. After the negotiating bank verifies that the documents are consistent with the provisions of the letter of credit, the documents and bills of exchange can be approved.

3. If the negotiating bank is not the issuing bank, the documents and bills of exchange shall be submitted to the issuing bank for compensation in the form agreed in advance.

Letter of credit refers to a written guarantee document issued by the issuing bank or the bank to a third party at the request of the applicant and according to its instructions, which contains a certain amount of money and pays with the documents that meet the requirements within a certain period of time. Letter of credit is the most important and commonly used payment method in the world.

a. L/C settlement method.

Letter of credit (letter of credit) (L c) is the product of bank credit intervention in the settlement of international sales price of goods. Its emergence not only solves the contradiction of mutual distrust between buyers and sellers to a certain extent, but also enables both parties to obtain the convenience of bank financing in the process of using credit cards to settle payments, thereby promoting the development of international enterprises. Therefore, it is widely used in the international world, so that it has become a major settlement method in the international world today.

Letter of credit is a conditional payment commitment made by the bank, that is, the bank issues a certain amount of money to the beneficiary according to the request and instruction of the applicant for issuance, and promises to pay with the prescribed documents within a certain period of time; Or the bank is willing to underwrite a letter of guarantee for the beneficiary's bill of exchange on behalf of the applicant under the condition of stipulating the amount, the date and the matching period and the documents. It belongs to bank credit and adopts the reverse exchange method.

b. Remittance and collection settlement methods.

Remittance and collection are the most commonly used payment settlement methods in the world.

a. Remittance t t

Remittance, also known as remittance, is a settlement method in which the payer uses various settlement tools to remit the money to the payee through the bank. It belongs to commercial credit and adopts the method of forward exchange. There are four parties involved in the remittance business:

The payer (remitter), the payee (payee or beneficiary), the remittingbank and the payingbank. Among them, there is a contractual relationship between the payer (usually the importer) and the remitting bank (the bank that entrusts the outward remittance), and there is a ** contractual relationship between the remitting bank and the remitting bank (the ** bank of the remitting bank).

When handling the remittance business, the remitter needs to fill in the remittance application form to the remittance bank, and the remitting bank is obliged to issue the payment letter to the remitting bank according to the instructions of the remittance application. After receiving the power of attorney for accounting, the remitting bank is obliged to pay the payment to the payee (usually the exporter). However, the remitting bank and the remitting bank shall not be liable for any losses caused by no fault of the remitting bank (such as the loss or delay of the payment order in the mail, etc., resulting in the inability or delay of the payee to receive the payment), and the remitting bank shall not be liable for the negligence of the remitting bank.

b. Collection (Collection) d p (document against payment) d a (document against acceptance).

Collection is a settlement method in which the exporter issues a remitter's bill of exchange (with or without shipping documents) with the importer as the payer after the goods are shipped, and entrusts the bank at the place of export to collect the payment on behalf of the importer through its branch or bank at the place of import. It belongs to commercial credit and adopts the reverse exchange method.