What Should Import Enterprises Pay Attention To When Issuing Certificates?

1. the seller and the buyer stipulate the payment of documentary credits in the trade contract.

2. the Buyer notifies the local bank (the issuing bank) to open a letter of credit in favor of the seller.

3. the issuing bank requests another bank to notify or confirm the letter of credit.

4. the advising bank notifies the seller that the letter of credit has been opened.

5. the seller will receive the L / C and make sure that it can fulfill the conditions stipulated in the L / C, that is, the shipment.

6. the seller will submit the documents to the nominated bank.

The bank may be the issuing bank, or the bank for payment, acceptance or negotiation specified in the letter of credit.

7. the bank will examine the documents in accordance with the letter of credit.

If the documents are in conformity with the stipulations of the letter of credit, the bank will pay, accept or negotiate in accordance with the stipulations of the letter of credit.

8. a bank other than the issuing bank sends the documents to the issuing bank.

9. the issuing bank will reimburse the bank which has paid, accepted or negotiated in accordance with the letter of credit in advance in the form of an agreed form.

10. the issuing bank will pay the bill after the buyer has paid the bill, and then the buyer will collect the goods by voucher.

1. application for opening an L / C

After importing and exporting parties agree to pay by documentary credit, the importer is responsible for issuing the certificate.

The first thing to do is to fill out the application form. This form is a legal relationship between the applicant and the issuing bank. Therefore, the application form is the most important document.

2. requirements for opening an L / C

The requirement for letter of credit application is clearly stipulated in the uniform practice. The importer must tell the bank exactly.

The instructions for issuing letters of credit must be complete and definite.

Applicants must always bear in mind that documentary credit is a document paction, not a commodity paction.

Bankers are not businessmen, so applicants can not expect bank staff to fully understand the technical terms in each paction.

Even if he writes all the terms in the sales contract to the letter of credit, if the beneficiary really wants to cheat, he will not be fully protected.

This requires the joint efforts of banks and applicants to use common sense to avoid issuing letters of credit which are cumbersome to all parties.

Banks should also discourage the use of letters of credit opened in the past when opening a letter of credit.

3. security of issuing

Upon receipt of the complete instructions from the applicant, the bank must immediately open the letter of credit in accordance with this instruction.

On the other hand, banks also have the right to require the applicant to hand over a certain amount of capital or other forms of his property as a guarantee for the bank to execute its instructions.

According to the existing regulations, foreign exchange owned by local authorities, departments and enterprises in China must be deposited in Chinese banks.

If some units need to import goods or technologies with documentary credits, Chinese banks will freeze funds in their accounts equivalent to the amount of the letter of credit as the issuing margin.

If the applicant has no account in the issuing bank, the issuing bank may require the applicant to deposit a sum equivalent to the total amount of the letter of credit in his bank before opening the letter of credit.

Such a guarantee can be realized through mortgage or pawning, such as stock, but banks may also provide financing through secured goods for pactions.

The issuing bank must first investigate the merchantability of the goods, and if the goods are easy to sell, the amount of financing provided by the bank to the customer is much higher than that of the unsalable goods.

4. obligations and responsibilities of the applicant and the issuing bank

The applicant has three main obligations to the issuing bank:

(1) the applicant must reimburse the issuing bank to obtain the loan payable to the beneficiary by the representative of the document.

Before he makes payment, the document as a document of title still belongs to the bank.

(2) if the document is in line with the terms of the credit and the applicant refuses to "redeem the bill", the funds that have been frozen on the deposit or account as a guarantee will be owned by the bank.

(3) the applicant has the responsibility to provide the issuing bank with the full cost of issuing the certificate.

The responsibility of the issuing bank to the applicant:

First, the issuing bank has the responsibility to open the L / C as soon as it receives the detailed instructions of the issuing bank.

Secondly, once the issuing bank accepts the application for opening an application, it must strictly follow the instructions of the applicant.

Letter of credit notification

1. liability of advising bank

In most cases, the letter of credit is not directly notified to the beneficiary by the issuing bank, but is pmitted through its correspondent bank in the beneficiary country or region.

The biggest advantage that the advising bank notifies the beneficiary is safety.

The duty of the advising bank is to examine the surface truthfulness of the letter of credit carefully and carefully.

2. letter of credit pfer mode

A letter of credit can be delivered by airmail, telegram or telex.

SWIFT in Brussels uses rented lines to pmit information across banks in many countries.

Most banks, including Chinese banks, have joined the group.

3. instructions for effective letter of credit

When an Issuing Bank instructs the advising bank by any effective means of pmission, advises the amendment of a letter of credit or a letter of credit, it will be considered a valid Letter of credit or a valid amendment, and there is no need to issue a letter of confirmation.

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Beneficiary's verification

After receipt of the letter of credit, the beneficiary should make the following checks as follows:

1. is the name and address of the buyer and seller company exactly the same as the company name and address printed on the invoice?

2. does the payment guarantee mentioned in the L / C meet the requirements of the beneficiary?

3. is the amount of the letter of credit correct? The total amount of the letter of credit should be combined with the contract, including the full cost of the contract.

4. does the terms of payment meet the requirements? Unless for certain countries or certain specific importers, exporters usually require immediate payment.

The term of a bill of exchange should be consistent with that stipulated in the contract under the conditions of a long-term letter of credit.

There is a letter of credit requiring a time draft, but it can be paid at sight. This letter of credit is called the "false forward letter of credit". Its effect on the beneficiary is the same as that at sight.

5. does the trade terms mentioned in the L / C meet the original requirements of the beneficiary?

6. is it possible to get all the documents to the bank within the validity period and the shipping documents deadline?

7. can you provide the necessary shipping documents?

8. is the stipulation of insurance consistent with the terms of the sales contract?

- the risk of insurance.

The beneficiary should contact the People's Insurance Company of China to decide whether to accept the applicant's request.

Any expenses beyond the scope stipulated in the sales contract shall be borne by the applicant.

- the amount insured.

The vast majority of letters of credit require insurance of 110% of the invoice value of CIF.

9. is the description (including free items), quantity and other items written correctly?

If there are any omissions or errors found in the examination of the above items, we should make immediate decisions on the following points and take the necessary measures:

Can the plan or document be changed to match?

- is it necessary to ask the buyer to amend the L / C, which party should pay for the modification of the cost?

In case of doubt, you may consult with the contact bank or the advising bank of this unit.

But one thing to bear in mind is that only the applicant and the beneficiary and the banks concerned agree to have the right to decide on the amendment.

1. submission of documents

In the documentary credit business, the submission of documents plays a very important role, because this is the key to the final settlement of the letter of credit.

Whether the beneficiary can get the payment after presenting the documents to the bank depends to a large extent on whether the letter of credit has been opened and whether the documents are ready.

2. time limit for presentation

The time limit for submission of documents is determined by the following three factors:

(1) the expiration date of the letter of credit;

(2) specific date of presentation after shipment date;

(3) banks have no obligation to submit documents outside their business hours.

The term "stop", "to", "up to", "from" and similar words in the credit relating to any date or time of shipment can be understood to include the date mentioned.

The term "future" is understood to exclude the date mentioned.

The first half of the month and the second half of the month are understood as the first day, the fifteen day and the sixteen day of the month, and the last day of the month. The first two days are included.

The first month, the middle of the month or the end of the month are understood as one month to ten, eleven to twenty, and twenty-one to the last day of the month. The first and the last two days are included.

3. limitation on the place of presentation

All L / C must provide a place for payment or acceptance, or a place for negotiation of documents against negotiation of a letter of credit, except for free negotiation of letters of credit.

Like the time limit for submitting a document, the place of maturity of the letter of credit will also affect the beneficiary's position.

Sometimes this happens. The issuing bank determines the place of maturity of the letter of credit in its own country or its own business counter, rather than the beneficiary country, which is extremely unfavorable to the beneficiary's situation, because he must ensure that the documents are submitted before the issuing bank's business counter during the validity period of the letter of credit.

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Bank audit documents

After presenting the documents to the bank, the bank is obliged to examine the documents carefully to ensure that the documents appear on the surface to meet the requirements of the letter of credit and the consistency between the documents.

1. single criteria

The bank must examine all documents of L / C reasonably and carefully to ascertain whether its surface compliance with the terms and conditions of the credit in conformity with the terms and conditions of the L / C should be determined by international standard banking practice reflected in these provisions.

The documents do not match each other on the surface. They should be deemed to be inconsistent with the terms of action.

The meaning of the term "surface" is that the bank does not need to ask personally whether the document is false, whether the shipment is false, whether the shipment is actually shipped, and whether it is invalid after the issuance of the documents.

Unless the bank knows that fraud is committed, the actual situation is not related to the bank.

Therefore, if the beneficiary makes surface and credit,

If the certificate stipulates the corresponding fake documents, it can also get the payment.

However, if the beneficiary has already shipped the stipulated goods in an appropriate manner, the documents will not be able to arrive at the conditions specified in the letter of credit, and the bank will refuse to accept the documents and the people will never get the payment.

The bank does not examine the documents not stipulated in the letter of credit, and if the bank receives such documents, it will be returned to the author or forwarded and irresponsible.

2. exemption from the validity of documents

The bank is not responsible for the form, completeness, accuracy, authenticity or legal effect of any document, or general and / or special conditions specified in the documents.

The bank is not responsible for the description, quantity, weight, quality, condition, packing, delivery, amount or existence of the goods, as well as the integrity, conduct and / or negligence, solvency, conduct or credit standing of the consignor, the carrier, the freight forwarder, the consignee, or the cargo insurer and any other person.

3. deadline for reviewing documents

How long does the bank need to check the documents submitted by the seller and notify the Seller whether the documents are complete? The uniform practice thirteenth clause B clearly stipulates that the issuing bank, the confirming bank (if confirmed) or the designated bank on their behalf should each have a reasonable time, that is, not to exceed the seven banking days after receipt of the documents, to examine the documents, decide whether to accept or reject the single rejection, and notify the parties who have received the documents from them.

4. discrepancy of documents and notices

If the issuing bank authorizes another bank to make payment on the basis of documents which are on the surface of the terms and conditions of the credit, undertake the responsibility for deferred payment, accept the draft or negotiate, then the issuing bank and the confirming bank (if confirmed) have the obligation: (1) to accept the documents; (2) to reimburse the designated bank which has paid, undertakes the responsibility for deferred payment, accepts the draft or negotiates.