Credit terms seem to be a headache in foreign trade business。Many enterprises refuse to open L/C because of the restrictive regulations, but in any case, many trading opportunities will be lost 。In fact, as long as you have a good grasp of the international practices and rules of the letter of credit, familiar with its operating rules, adhere to your own principles and bottom line, you can control the initiative in your own hands。
Take a real letter of credit to introduce the relevant terms and risks of the letter of credit!
Letterof Credit (Letterof Credit)，L/C) means the issuing bank (Client bank) at the request of the applicant (client) and in accordance with its instructions ，A written guarantee issued to the beneficiary (seller) containing a certain amount of money，The document states that payment is to be made against qualified documents within a certain time limit 。Letter of credit is the most important and commonly used means of payment in international trade。
To sum up ，The issuing of a letter of credit mainly involves the issuing bank (buyer);Beneficiary (seller)，Issuing bank (to issue a credit according to the contract and application documents submitted by the issuing bank);(Beneficiary's local bank ，Usually only responsible for verifying the authenticity of the letter of credit);Negotiation bank (to examine the shipping documents, bills of exchange and other documents issued by the beneficiary)，Advance payment to the issuer，Sometimes the advising bank is also the negotiating bank/presenting bank)。
Select letter of credit terms to share with you。
A letter of credit is irrevocable in nature, that is, irrevocable。
The L/C number is Number20XXXX ----. Usually when you open a L/C, you are required to enter the number 31GXXXX----DateofIssue31GXXXX---- the application date 。
Data processor Place of Exp iry31 DXXXX---- Failure time。
Note: There are risks of "double maturity" and "foreign maturity" during the validity period of the credit 。
How to understand double expiration and foreign expiration？
Delivery Date/Latest Delivery Date: that is, the date or latest date on which the seller will load all the goods on the carrier or deliver them to the carrier。
Validity: the validity period of the letter of credit。The seller takes the bill of lading to the negotiating bank to apply for negotiation after loading 。
Presentation deadline: refers to the deadline for the seller to submit the payment application to the bank。If so stipulated in the credit, on the specified date;If not, within 21 days after the transport document is issued。 But in either case, the time of presentation is earlier than the validity of the L/C。
Therefore, when we say double maturity, we mean that the latest shipment date and the deadline stipulated in the letter of credit are on the same date 。 Alternatively, if the letter of credit does not specify a final shipment date, the default latest shipment date is the day of validity 。
Double maturity makes the literal deadline of the letter of credit virtually useless, which is not conducive to the exporter's handling of foreign exchange settlement 。 Generally, the time of shipment should be at the latest and the expiry date of the letter of credit should be given a certain interval so that the seller can prepare documents, bills of exchange and other relevant materials。
If the letter of credit expires abroad, and the relevant documents must be sent abroad, then we must take into account the transport time of the documents, because we can not grasp the time required for the documents to reach the foreign bank, and it is easy to delay or lose, so there is a certain risk。
The following measures can be taken to prevent and control risks:
First, it is to reserve at least 7 days after the goods are prepared as the final shipment time, and the delivery period should not be less than 12 days;
2. After the arrival of the letter of credit, the exporter needs to review the letter of credit, if it can not meet the requirements, it requires the applicant to modify, after confirming the letter of credit, it must prepare the relevant documents to hand over to the bank, and should be kept for 3-4 weeks;
Third, pay attention to the expiration date and expiration place, and be alert to "double expiration" and "foreign expiration".。 If the contract expires abroad, it can be agreed at any time when the expiry date should be based on the postmark time of the exporter's mailing of the documents, not the time of arrival abroad。
If the credit matures in the issuing bank, the beneficiary may request the issuer to change the "place of expiry" to "the bank in the place of exporting country" in order to avoid delayed issuance of documents to the issuing bank, leading to non-payment 。 If it cannot be amended, the beneficiary shall submit the documents and apply for the letter of credit within the prescribed time, and remind the banking staff to apply for the set of documents as soon as possible 。
Applicant Bank51D XXXX---- Applicant bank51d XXXX----
ADRESS:XXXX ------ address of the issuing bank
Applicant 50 XXXX------ Applicant 50 XXXX------
ADRESS:XXXX ------ Address of the applicant
Beneficiary 59 SXXXX------- beneficiary
ADRESS:XXXX ------ Address of the beneficiary
注意：
The name and address of the beneficiary shall be the same as the name in the contract and related documents。 If the name or address of the beneficiary is incorrect, it will be inconvenient for future remittance 。
The total amount of the letter of credit Cu rrencyCodeAmount 32 BXXXX-------
Note: The amount of the letter of credit should be consistent with the terms of the contract. If there is any disagreement, the enterprise should communicate in time and modify the contract or letter of credit to make them consistent。 If the letter of credit is modified again after it is issued, the enterprise should handle it carefully, because even if the enterprise agrees to accept the letter of credit, the bank still has the risk of refusing to pay 。
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