The circulation of L/C
Importer contract Exporter
? ? ?
? ? ?
Reimbursing Opening Advertising negotiating ?
Bank Bank Bank bank ?
? The buyer makes an application for a letter of credit.
The opening bank approves the application and issues the actual letter of credit.
? The opening bank forwards the L/C to the advertising bank. ? The advertising bank delivers the L/C to the beneficiary. ? The beneficiary ships the goods and prepares documents, draws a draft and presents them to his bank.
? The beneficiary's bank negotiates the documents and pays funds to the beneficiary in accordance with the L/C. ? The negotiating bank forwards the documents to the opening bank.
? The opening bank receives the documents and check them. If the documents comply with L/C, the opening bank credits the negotiating bank’s account.
? The opening bank notifies the buyer to make payment for documents.
? After making payment, the buyer receives the documents and takes delivery of the goods.