Marketing Stratergy
A Guide to Letters of Credit
Import Export
Table of Contents
Introduction Parties Involved in a Letter of Credit What is a Letter of Credit? Advantages and Disadvantages of Using a Letter of Credit Letters of Credit – Importer’s Perspective Instructions for an Importer to Complete a Letter of Credit Application Amendments to a Letter of Credit Questions Commonly Asked by Importers Letters of Credit – Exporter’s Perspective Step-by-Step Process for the Exporter Unconfirmed vs. Confirmed Letter of Credit How to Confirm a Letter of Credit Copy of an Export Letter of Credit in SWIFT Format What an Exporter Should Look for When Reviewing a Letter of Credit How to Convey Letter of Credit Requirements to the Importer Document Preparation Checklist Draft Commercial Invoice Transport Document Insurance Certificate Certificates of Origin and Inspection Packing and Weight Lists Dealing with Discrepancies Acceptances Discounting Acceptances Assignment of Proceeds Questions Commonly Asked by Exporters Standby Letters of Credit Other Types of Letters of Credit Back-to-Back Letter of Credit Transferable Letter of Credit TD’s North American Global Trade Finance Offices – See back cover
2 3 4 8 10
23
39 42
A Guide to Letters of Credit
Letters of Credit have been a cornerstone of international trade dating back to the early 1900s. They continue to play a critical role in world trade today. For any company entering the international market, Letters of Credit are an important payment mechanism which help eliminate certain risks.
Our purpose in publishing this guide is to provide a basic understanding of Letters of Credit from both the Importer’s and Exporter’s points of view. In addition, we hope that it will serve as a handy reference tool as you use Letters of Credit in your international trade transactions.
2
Parties Involved in a Letter of Credit
A Guide to Documentary Letters of Credit
The following definitions will assist in understanding
Import Export
Table of Contents
Introduction Parties Involved in a Letter of Credit What is a Letter of Credit? Advantages and Disadvantages of Using a Letter of Credit Letters of Credit – Importer’s Perspective Instructions for an Importer to Complete a Letter of Credit Application Amendments to a Letter of Credit Questions Commonly Asked by Importers Letters of Credit – Exporter’s Perspective Step-by-Step Process for the Exporter Unconfirmed vs. Confirmed Letter of Credit How to Confirm a Letter of Credit Copy of an Export Letter of Credit in SWIFT Format What an Exporter Should Look for When Reviewing a Letter of Credit How to Convey Letter of Credit Requirements to the Importer Document Preparation Checklist Draft Commercial Invoice Transport Document Insurance Certificate Certificates of Origin and Inspection Packing and Weight Lists Dealing with Discrepancies Acceptances Discounting Acceptances Assignment of Proceeds Questions Commonly Asked by Exporters Standby Letters of Credit Other Types of Letters of Credit Back-to-Back Letter of Credit Transferable Letter of Credit TD’s North American Global Trade Finance Offices – See back cover
2 3 4 8 10
23
39 42
A Guide to Letters of Credit
Letters of Credit have been a cornerstone of international trade dating back to the early 1900s. They continue to play a critical role in world trade today. For any company entering the international market, Letters of Credit are an important payment mechanism which help eliminate certain risks.
Our purpose in publishing this guide is to provide a basic understanding of Letters of Credit from both the Importer’s and Exporter’s points of view. In addition, we hope that it will serve as a handy reference tool as you use Letters of Credit in your international trade transactions.
2
Parties Involved in a Letter of Credit
A Guide to Documentary Letters of Credit
The following definitions will assist in understanding