1.The applicant applied to the bank for a letter of credit
Generally speaking, the parties to an international trade will agree on how to pay at the contract signing stage。If the payment method stipulated in the trade contract is a letter of credit, the importer shall apply for a letter of credit to the local bank within the time limit stipulated in the contract。
2.Open and pay by issuing bankLetter of credit
Before issuing a letter of credit, the bank should generally investigate the credit standing of the applicant and provide a written or electronic application for the applicant to fill in。After the information filled in is approved by the bank, a letter of credit can be opened and paid to the exporter。
3.The notification passes the credit to the beneficiary
After issuing the credit, the issuing bank will require another bank (advising bank) to advise or guarantee the credit。After receiving the letter of credit, the notifying bank will check the authenticity and accuracy of the information, focusing on checking the signature seal or confidentiality, and give the letter of credit to the exporter。
4.Beneficiary review, amendment of letter of credit, preparation and transportation, presentation documents
The beneficiary needs to review the terms of the letter of credit received in detail。If it is found to be unacceptable or inconsistent with the previous confirmation, it shall promptly negotiate with the importer, arrange the production and preparation of goods, shipping documents, bills of exchange, submission of shipping documents such as bills of lading, and negotiate with the negotiating bank within the time limit and validity period specified in the letter of credit。
5.Inform the bank or negotiating bank to review the order and claim against the issuing bank
After receiving the documents, the negotiating bank needs to review them in time and determine whether the documents are consistent within 5 working days。The examination form of a negotiating bank does not examine the essence, but only the surface content。After negotiation, the negotiating bank may send documents to the issuing bank in accordance with the provisions of the terms of the credit regarding the invoice, and claim compensation from the issuing bank or its designated compensation bank。
6.Pay issuing bank to review documents
Reimbursement refers to the act of the issuing bank or the nominated reimbursing bank to pay to the negotiating bank。The issuing bank shall pay to the negotiating bank after receiving the documents sent by the negotiating bank。
7.Payment and presentation by applicant
After payment is made to the negotiating bank, the issuing bank shall immediately notify the importer of the payment redemption order。After receiving the notice, the importer shall immediately check the documents at the issuing bank, pay the whole payment and related fees to the bank and redeem the documents after confirmation。The bank shall refund the deposit or collateral submitted when the exporter applies for the opening of the certificate。