The importer and exporter sign a contract to confirm payment by letter of credit. And stipulate some important delivery details in the contract. After that, domestic importers hold trade contracts to open import letters of credit in local banks.
Usually, the bank will evaluate the importer's credit status, give reasonable credit, and ask the importer to pay a certain percentage of the deposit.
For example, if the amount of the letter of credit is $6.5438+$0.00 million, the bank may require the customer to pay a deposit of $200,000 in advance and keep it in a special deposit account.
If the customer's credit in the bank is not high, and the bank feels uncertain, it may require the customer to pay the maximum deposit of 100%.
After the deposit is prepared, the importer's bank will open an import letter of credit for the importer according to the contract and send it to the foreign exporter's bank through the SWIFT system.
After receiving the import letter of credit, the foreign exporter's bank will deliver the letter of credit to the exporter, and the exporter will prepare the goods according to the provisions of the letter of credit.
The letter of credit stipulates the currency, amount, unit price, quantity, port of departure, port of destination, time of departure and shipping details. Exporters only need to do their homework according to the order.
After all the goods are ready for shipment, the exporter will give the delivery documents to his bank, and his own bank will mail the documents to the importer's bank.
The purpose of mailing documents is to ask for money. Because the goods have been sent out, the next thing to do is to collect money.
After receiving the documents, the importer's bank should check whether the documents meet the requirements. If it meets the requirements, submit the import documents to the importer.
The premise is to transfer the payment to the bank's internal account first, that is, to prepare for import payment. There are also bank importers, who pay import documents on the one hand and payment for goods on the other.
As mentioned above, importers usually only pay a part of the deposit when opening letters of credit. What about the rest? The rest of the importer needs to pay the bank to make up the difference.
Banks don't have to worry that importers don't make up the difference, because documents are controlled by banks.
If the importer does not pay, the bank will not give the documents (there is a bill of lading in the documents, and the importer cannot pick up the goods without the bill of lading).
After the importer's bank receives all the payment, it can remit the money to the exporter's bank through the SWIFT system after deducting the handling fee, document review fee and other payable expenses, and the payment of the letter of credit is completed.
Related questions and answers: the payment terms of the letter of credit can be divided into:
1, sight letter of credit. Refers to the letter of credit in which the issuing bank or the paying bank immediately performs the payment obligation after receiving the documentary draft or shipping documents that meet the terms of the letter of credit.
2. usance letter of credit. Refers to the letter of credit in which the issuing bank or the paying bank performs the payment obligation within the prescribed time limit after receiving the letter of credit documents. The longest term of a usance letter of credit exceeds 360 days (inclusive). * * * There are three different terms: within 90 days, 90 days to 360 days (including 90 days) and over 360 days (including 360 days).
3. False usance letter of credit. The letter of credit stipulates that the beneficiary draws a time draft, which will be discounted by the paying bank, and all interest and expenses will be borne by the issuer. For the beneficiary, this letter of credit is actually payable at sight, and there is a "false forward" clause in the letter of credit.
Legal basis: Article 28 of the Measures for Settlement of Domestic Letters of Credit can only be transferred once, that is, it can only be transferred from the first beneficiary to the second beneficiary. The transferred letter of credit cannot be transferred to any subsequent beneficiary at the request of the second beneficiary, but the first beneficiary is not regarded as the subsequent beneficiary.
Transfer letter of credit refers to the letter of credit that has been changed from the transferring bank to the second beneficiary.
Related questions and answers: How to pay by letter of credit? Here I will briefly introduce the concept of payment by letter of credit, then describe the process of payment by letter of credit in graphic form, and finally introduce the points for attention in payment by letter of credit.
First, the concept of payment by letter of credit.
Payment by letter of credit is the most important payment method for large-value transactions in international trade today. Under the condition that the documents are in conformity with the letter of credit, the issuing bank pays the exporter on behalf of the importer, and the payment is guaranteed by the bank credit, which solves the contradiction between the importer and the exporter in terms of payment and delivery. As long as the exporter delivers the goods in accordance with the provisions of the letter of credit and submits the documents, the importer can receive the payment.
Second, the process of credit payment
We usually pay by letter of credit, which may only involve the opening and amendment of letter of credit and the payment of letter of credit, but it is actually a complicated process, and most of the behind-the-scenes work is done by banks. The specific process is as follows:
As shown in the above figure, payment by letter of credit means that after the exporter submits the documents, the negotiating bank pays the goods to the exporter first, and the negotiating bank requires the issuing bank to pay according to the documents. After the issuing bank examines the documents, it pays the payment to the negotiating bank first, and then asks the importer to pay the bill.
Three. Matters needing attention in letter of credit payment
1. The letter of credit business is essentially a credit business. At present, the bank's review on the opening of letters of credit is very strict, which generally requires the resolution of shareholders' meeting or board of directors, so it is necessary to communicate with the bank in advance to avoid delaying the opening of letters of credit because there is no resolution of shareholders' meeting or board of directors;
2. For large letters of credit, banks also need to report the credit line to the head office. According to the amount, the time is between half a month and two months, and enterprises should make plans early;
3. According to the credit status of the enterprise, the bank will require a certain percentage of the deposit (now it is basically a full deposit). The enterprise can negotiate with the bank and ask for deposit interest at the agreed interest rate, otherwise the bank will pay the current interest.
Once the letter of credit is issued, it is an independent document and is not attached to the trade contract. In case of dispute, the letter of credit is not bound by the terms of the contract. Therefore, before opening the L/C, the contract and the exporter's instructions for opening the L/C should be consistent.
As the bank pays cash against documents, it is not bound by the contract regardless of the quality of the goods. In order to make the quality of the goods meet the requirements, "provide the commodity inspection certificate of the designated commodity inspection agency" can be added to the documents for payment of shipment payment under the letter of credit;
6. Generally, when paying the final payment of the letter of credit, only the receipt signed by both parties is required. Note that it is only signed but not stamped, which means that the acceptance sheet only needs to be signed by the engineers of both parties and does not need to be reviewed by other departments. In order to ensure that the goods are installed and debugged in place before payment, this clause can be further refined, such as restrictive clauses such as "the acceptance certificate must indicate that the equipment is in good operation" and strengthen the training of engineers.
7. If partial shipments are allowed in the letter of credit, the exporter will have to pay the corresponding payment for each shipment; If it is stipulated that partial shipment is not allowed, the exporter must make one shipment.