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The circulation of LC

By David Cunningham,2014-06-25 20:21
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The circulation of LC

    The circulation of L/C

    Importer contract Exporter

     ? ? ?

     ? ? ?

    Reimbursing Opening Advertising negotiating ?

     Bank Bank Bank bank ?

     ?

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    ? 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.

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