Tuesday, July 5, 2011

Payment Methods: Letter Of Credit (Confirmed, Sight)

Click on the graphic to enlarge.

  1. Exporter and Importer sign the purchase contract
  2. Importer requests for Letter of credit (LC) and release funds to its Bank
  3. Importer’s Bank Issue LC and sends it to the Confirming Bank
  4. Confirming Bank adds its confirmation to the LC and forwards it to the Exporter’s Bank
  5. Exporter’s Bank advises the LC the Exporter
  6. Exporter ships the goods to the Importer
  7. Exporter forwards shipping documents to its Bank
  8. Exporter’s Bank forwards shipping documents to the Confirming Bank
  9. Confirming Bank transfers the funds to the Exporter’s Bank
  10. Exporter’s Bank pays the Exporter
  11. Confirming Bank forwards shipping documents to the Importer’s Bank
  12. Importer’s Bank release the shipping documents to the Importer
  13. Importer clears its goods using the shipping documents

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