Letters Of Credit In Foreign Trade, Which Must Be Known To Foreign Trade Dealers

with Letter of credit Settlement, Bill The confirmation is first confirmed by the negotiating bank and the issuing bank, not by the customer (importer). After receiving the documents submitted by the beneficiary (exporter), the negotiating bank and the issuing bank confirm that the documents submitted are in conformity with the requirements stipulated in the letter of credit, and accept the documents and bear the obligation to pay. If there is any discrepancy, the negotiating bank or the issuing bank may refuse to pay. Because the first payer of the L / C is the issuing bank or the designated paying bank, and the applicant (importer) of the L / C is the second person responsible for payment. That is to say, as long as the document is identical, the issuing bank or its designated bank. payment The bank must pay the goods in advance, buy the full set of documents, and then notify the applicant, requiring the applicant to pay or accept the redemption order.

As for the discrepancy of documents, there are two ways to deal with them: 1) when there are discrepancies in the negotiating bank's presentation, any discrepancies will be available and can be modified directly, so that the discrepancies will be directly corrected so as to ensure that they are in line with the letter of credit so as to ensure normal negotiation of payment.

2) when the negotiating bank makes a presentation, it finds that there are discrepancies, but it is time to amend it, or if the documents are found to be discrepant to the issuing bank, and is unable to be modified at this time, it can notify the applicant (importer) to explain the discrepancy of the documents, ask him to confirm the acceptance of the discrepancy, and at the same time, the issuing bank indicates that the discrepancy of the documents is acceptable, and it can still recover the payment. But there is a premise that only the documents do not conform to the stipulate of the letter of credit, and the quality of the goods is not in conformity with the problem. Otherwise, the importer may not accept the quality of the goods.

The above (2) receipt of foreign exchange in fact has already become the nature of collection by the nature of the letter of credit, that is, the status of the first payment obligation of the original letter of credit, which has been refunded as the position of the collecting bank. This change is caused by discrepancies of documents. So the risk has increased.

3) therefore, the most important problem in the settlement of letter of credit is to ensure that the documents tally with each other and only meet the requirements. Only in this way can we ensure the safe collection of foreign exchange. This is the primary problem that must be paid attention to by the letter of credit clearing house.