The letter of credit is opened with a 30 margin, and how to deal with the remaining exposure

L/C margin deposit refers to the amount deposited into the special bank L/C margin account by an enterprise using the L/C settlement method in accordance with regulations for the purpose of obtaining L/C. When an enterprise applies to the bank for the issuance of a letter of credit, it shall submit to the bank an application for levy, a letter of commitment from the applicant for the letter of credit, and a purchase and sale contract.

It is also a detailed account for funds in other currencies "Funds in other currencies - Letter of Credit margin".

The accounting is as follows: when the enterprise fills in the "L/C application" and deposits the L/C deposit deposit with the bank, it should return the "L/C application" receipt according to the bank's seal. The "Other Monetary Funds - Letter of Credit Margin" account is debited and the "Bank Deposit" account is credited.

The enterprise receives a notice from the issuing bank. According to the L/C settlement voucher of the supplier and the attached invoices, the accounts of "material procurement" or "raw materials", "inventory goods", "tax payable - VAT payable (input tax)" and "other monetary funds - L/C deposit" are credited; When the unused L/C margin deposit is transferred back to the opening bank, the "Bank Deposit" account is debited and the "Other Monetary Funds - L/C Margin" account is credited.

When preparing the cash flow statement, whether the L/C margin deposit should be deducted from the "cash" needs to be analyzed on a case-by-case basis, and the essence of whether the use of the margin deposit is restricted, if the use is restricted, it should be deducted from the cash at the end of the period.

Accounting Standards Definition of Cash and Cash Equivalents in the Statement of Cash Flows:

1) Cash refers to the cash in hand and the deposits that can be used for payment at any time. Deposits that cannot be used for payment at any time are not considered cash.

2) Cash equivalents refer to investments held by enterprises with short maturities, strong liquidity, easy conversion into known amounts of cash, and little risk of value changes. Among them, "short term" generally refers to expiration within 3 months from the date of purchase.

From the above, it can be seen that if the L/C margin can be used for payment within 3 months after the balance sheet date, it should not be deducted from "cash" when preparing the cash flow statement; Conversely, if it cannot be used for payment within 3 months after the balance sheet date, it should be deducted from "cash" when preparing the cash flow statement.

The exposure of 5 million is that you want to open a letter of credit of 6 million, and there is a shortage of 5 million, the 5 million is the credit guarantee provided by the bank to you, when the short-term working capital loan management, a single margin of 20%, I personally understand that you have to provide 20% of the amount of the certificate to the bank as a margin, that is, 1.2 million, then your margin is insufficient, so it is estimated that the bank issuance fee will be high, or you have to make up the guarantee amount.

A 30% margin is used for the issuance of the L/C, and the remaining exposure is guaranteed by the credit granted by the applicant in the bank. If the applicant does not have credit in the bank, 100% of the deposit is required, and 30% of the deposit will not be required.

30% can be deposited directly, and the letter of credit can handle the corresponding business as soon as it is opened.

L/C margin deposit refers to the amount of money deposited into the special bank L/C margin account by the L/C settlement method in accordance with the regulations in order to obtain L/C, and the amount of margin that needs to be paid

1. No credit, full deposit.

2. In the case of credit, the standards of each bank are different, and you can apply to the bank for a lower standard of deposit. Generally, a 10% margin can be applied for up to 5% or even 4%. Like Bank of China, generally 10%, Industrial and Commercial Bank of China, Huaxia, etc. can apply for a lower margin.

3. Reduce the amount of margin by reducing the percentage of overflow.

The rest is pledged by pledge and letter of credit, similar to the pledge of deposit receipts. However, it should be noted that the date of the letter of credit should be after the acceptance due date.

Open a 100W letter of credit, pay 10% of the margin, and expose 90% (that is, 90w), then this exposure part is to cut the credit line (or loan line) of the applicant.

If the L/C is under a single 50w of goods, then, if it is a L/C at sight, and the issuing applicant applies to the issuing bank for the 50w to do import bills, then, the 50w amount should be released after the issuing applicant repays or settles the loan to the issuing bank, if it is partially settled, it will be partially released, and all will be released if it is fully settled, that is, the release corresponds to the amount of repayment or settlement.

If the letter of credit is a revolving letter of credit, then the exposure part of the letter of credit can be recycled, i.e., the repayment or settlement will restore the exposure; If it is a non-revolving letter of credit, then it doesn't matter what the exposure is circulating.

For example, if the amount of 100W non-revolving letter of credit arrives in full, the issuing applicant must pay the export part of the L/C to the issuing bank, that is, the payment of 90w, and when the full payment is received, the original documents will be handed over to the issuing applicant, and the issuing applicant will go through the procedures such as picking up the goods with the original documents. If the applicant has no money to pay to the issuing bank for the time being, the issuing bank will release the bill to the issuing applicant after completing the procedures for billing.

1. Create a loan contract, and after the loan is disbursed, you occupy the exposure. Once you have cleared the bill, the exposure will be fully released.

2. Whether the L/C exposure can be recycled depends on how the loan is approved. If the batch is a revolving quota, then the exposure can be recycled. If the batch is a one-time quota, the exposure cannot be recycled.

In the case of revolving credits, the exposure can be restored after closing. If it's a one-time quota, the exposure can't be restored.