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ONLINE CERTIFICATE IN EXPORT MANAGEMENT 2012
COURSE 6. RECEIVING PAYMENT FOR YOUR EXPORT SALES
PARTIES INVOLVED IN A LETTER OF CREDIT (L/C) TRANSACTION
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PARTIES INVOLVED IN A LETTER OF CREDIT (L/C) TRANSACTION
SELLER:
Sells goods to
importer and receives payment from importer's bank (Issuing Bank) after LC terms
and conditions have been met. Also referred to as "exporter" or "beneficiary."
BUYER:
Orders goods from exporter and applies for L/C at Issuing Bank to pay exporter per L/C terms and
conditions. Buyer can also be referred to as "importer" or "applicant."
ISSUING BANK:
Substitutes its credit standing for that of the importer, issues L/C, and guarantees payment to
exporter if all L/C terms and conditions are met. Relies on importer for reimbursement of payment made
to the exporter under the L/C.
ADVISING BANK:
Receives L/C from Issuing Bank, verifies its authenticity, and forwards the original L/C to exporter
without any legal obligation to pay exporter under the terms of L/C.
Note: The Advising Bank will usually be the exporter's bank.
Exporter requests that this bank will also act as the Confirming
Bank and the Reimbursing Bank so that the exporter will
receive payment promptly.
REIMBURSING BANK:
Situated between the Issuing Bank and the Advising Bank, it pays the Advising Bank
when all L/C requirements have been met.
EXAMINING BANK:
Receives documents from exporter after shipment, examines documents for compliance with
L/C terms and conditions, requests and receives payment from Issuing Bank (or Reimbursing Bank), and
subsequently pays the exporter.
CONFIRMING BANK:
Guarantees payment under the Issuing Bank's L/C if all L/C terms are met. Upon presentation of
documents, exporter will receive full payment directly from the Confirming Bank rather than the Issuing
Bank located in the importer's country. When the Confirming Bank is the exporter's bank, the exporter
will receive immediate payment upon presentation of documents required by the L/C.
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Copyright 1987 - 2012, Export Institute of the United States
Telephone: (952) 943-1505, http://www.exportinstitute.com
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