Silde thuyết trình TACN2 Topic: Letter of credit

EXPORTING AND EXPORT CONTRACT LETTER OF CREDIT MEMBERS Group 10 Lê Thị Kim Chi Nguyễn Ánh Phượng Đàm Quỳnh Anh Vũ Thu Hà Lê Ngọc Trâm Commerce Slides CONTENT Commerce Slides I DEFINITION OF LETTER OF CREDIT II CLASSIFICATION OF LETTER OF CREDIT III PROCEDURE TO OPEN A LETTER OF CREDIT IV PROCEDURE OF PAYMENT BY LETTER OF CREDIT V PRACTICE DEFINITION OF LETTER OF CREDIT [Clip] MAIN PARTIES IN A LETTER OF CREDIT Applicant/ Importer A Issuing Bank Advising Bank Beneficiary/ Exporter Commerce Slides LETTER OF CREDIT RULES - Published by ICC – International Chamber of Commerce - Called UCP , Uniform Custom and Practice for Documentary credit, which is regularly updated by ICC - The latest version is UCP 600 - The rules have been effective since July 2007 Commerce Slides CLASSIFICATION OF LETTER OF CREDIT TYPES OF LETTER OF CREDIT / E L B A C O V RE E L B A C O V E IRR OTH ER CONFIRM ED/ - Tra Commerce Slides TYP ES nsfer able - Bac k to back - Rec iproc al UNCONFIR M ED OTHER TYPE S / T H G I S T A D E R E F F E D - Irrevoca ble without recou rse - Red clau se - - Revolv ing REVOCABLE/IRREVOCABLE L/C REVOCABLE L/C - Can be cancelled at any time by the buyer or by the issuing bank - Not used frequently - UCP 600 has no reference to revocable letters of credit Commerce Slides 10 IRREVOCABLE L/C 3 - A financial instrument used by banks to guarantee a buyer's obligations to a seller - Cannot be cancelled without the agreement of the credit parties - Often used to facilitate international trade ADVANTAGES & DISADVANTAGES FOR IMPORTER CONS PROS A letter of credit shows solvency for the buyer, and allows them to reduce 25 1 Actual cost of the goods can increase 2 Costs involved can make L/C expensive due to effects of currency fluctuations or eliminate an initial payment The buyer is certain to receive the goods stipulated in the letter of credit Commerce Slides COMPARISON Commerce Slides 26 SUMMARY Background information about L/C All kinds of Letter credit and their characteristics Steps in opening a Letter of credit Method of payment by Letter of credit Commerce Slides 27 TRANSLATE INTO VIETNAMESE/ENGLISH 28 The beneficiary shall be liable to check credit terms carefully In case of the beneficiary does not agree with the terms and conditions or cannot comply with any of terms and conditions, he shall be liable to arrange for the amendments of the L/C through his contract partner (who has asked the bank to open L/C) Commerce Slides 29 PRACTICE Commerce Slides QUESTIONS What is the clause billQuestion of lading? A bill of lading that shows a shortfall or damage in the delivered goods Typically, if the shipped products deviate from the delivery specifications or expected quality, the receiver may declare a clause bill of lading Answer Commerce Slides 30 QUESTIONS According the ICC, What documents a letter of Question credit require? Commercial invoice, Transport document, Insurance document, other documents such as: Certificate of origin, Answer packing list, etc Commerce Slides 31 TRANSLATE INTO VIETNAMESE/ENGLISH The beneficiary shall be liable to check credit terms carefully In case of the beneficiary does not agree with the terms and conditions or cannot comply with any of terms and conditions, he shall be liable to arrange for the amendments of the L/C through his contract partner (who has asked the bank to open L/C)  Người hưởng lợi có trách nhiệm kiểm tra điều khoản tín dụng cách kỹ lưỡng Trong trường hợp người hưởng lợi không trí với điều kiện điều khoản cảm thấy tuân thủ điều kiện điều khoản chịu trách nhiệm xếp sửa đổi thư tín dụng thông qua đối tác hợp đồng (chính người xin mở thư tín dụng) Commerce Slides 32 TRANSLATE INTO VIETNAMESE/ENGLISH 33 The seller shall make the first shipment within 30 days from the date the seller receives notification of an Irrevocable L/C which has been issued in his favour Commerce Slides TRANSLATE INTO VIETNAMESE/ENGLISH 34 The seller shall make the first shipment within 30 days from the date the seller receives notification of an Irrevocable L/C which has been issued in his favour Bên bán phải giao chuyến hàng vòng 30 ngày kể từ ngày bên bán nhận thông báo bên mua mở thư tín dụng cho bên bán hưởng Commerce Slides TRANSLATE INTO VIETNAMESE/ENGLISH 35 Việc toán thực thư tín dụng không hủy ngang Thư tuân thủ theo Quy tắc thực hành thống tín dụng chứng từ ràng buộc ngân hàng phát hành tuân thủ điểu kiện thư tín dụng Commerce Slides TRANSLATE INTO VIETNAMESE/ENGLISH Việc toán thực thư tín dụng không hủy ngang Thư tuân thủ theo Quy tắc thực hành thống tín dụng chứng từ ràng buộc ngân hàng phát hành tuân thủ điểu kiện thư tín dụng  Payment for the goods shall be made by an irrevocable letter of credit This letter shall comply with the UPC600 binding issuing bank to comply with terms and condition of L/C Commerce Slides 36 •Cash in advance : trả tiền trước PHRASES Cash on delivery – COD : toán nhận hàng Cash on delivery – COD : toán nhận hàng Cash in advance : trả tiền trước Cash with order : Trả lúc kí hợp đồng đặt hàng Payment guarantee: Bảo lãnh toán Tender guarantee : Bảo lãnh dự thầu Performance guarantee : Bảo lãnh thực hợp đồng Prepayment guarantee : Bảo lãnh tiền ứng trước Demand guarantee: Bảo lãnh theo yêu cầu ECI – Export credit Insurance : Bảo hiểm tín dụng xuất Certificate of origin – C/O : Giấy chứng nhận xuất xứ hàng hóa Commerce Slides 37 •Cash in advance : trả tiền trước PHRASES Certificate of inspection: Giấy chứng nhận kiểm nghiệm Special requirement : quy định riêng biệt Certificate of phytosanitary : Giấy chứng nhận kiểm dịch thực vật Road consignment note : Marine bill of lading : Vận đơn đường biển Combine transport bill of lading Time draft : hối phiếu có kì hạn Brief advice: văn tóm tắt ECI – Export credit Insurance : Bảo hiểm tín dụng xuất Certificate of origin – C/O : Giấy chứng nhận xuất xứ hàng hóa Commerce Slides 38 39 THANK YOU! Izabal Slides [...]... goods stipulated in the letter of credit Commerce Slides COMPARISON Commerce Slides 26 SUMMARY Background information about L/C All kinds of Letter credit and their characteristics Steps in opening a Letter of credit Method of payment by Letter of credit Commerce Slides 27 TRANSLATE INTO VIETNAMESE/ENGLISH 28 1 The beneficiary shall be liable to check credit terms carefully In case of the beneficiary does... without recourse $ Revolving $ Red clause 14 PROCEDURE TO OPEN A LETTER OF CREDIT PROCEDURE TO OPEN A LETTER OF CREDIT Commerce Slides 16 A FORM USED TO APPLY FOR A L/C 1 APPLICANT 4 DATE & PLACE OF EXPIRY 2 ISSUING BANK 5 BENEFICIARY 3 APPLICATION DATE 6 METHOD OF ISSUE Commerce Slides 17 A FORM USED TO APPLY FOR A L/C 7 TRANSFER OF THE CREDIT 18 8 COMFIRMATION 9 AMOUNT 10 PARTIAL SHIPMENT 11 TRANSSIPMENT... u ra Other documents such as : certificate of origin, certificate Commerce Slides of analysis, packing list, etc n ce d ocum e nt ADVANTAGES & DISADVANTAGES FOR IMPORTER CONS PROS A letter of credit shows solvency for the buyer, and allows them to reduce 25 1 1 Actual cost of the goods can increase 2 2 Costs involved can make L/C expensive due to effects of currency fluctuations or eliminate an initial... L/C 13.INSURANCE COVERED BY THE BUYER 14 TRANSPORT INFORMATION 15 GOODS 16 TERMS OF TRADE 17 SET OF DOCUMENTS 18 TIME TO PRESENT DOCUMENT Commerce Slides 19 A FORM USED TO APPLY FOR A L/C 19 ADDITIONAL INSTRUCTIONS 20 DEBIT AUTHORIZATION 21 SIGNATURE OF THE BUYER Commerce Slides 20 21 PROCEDURE OF PAYMENT BY LETTER OF CREDIT Commerce Slides PROCESS Commerce Slides 22 THE L/C’ S ASSOCIATED DOCUMENTATION... clause bill of lading Answer Commerce Slides 30 QUESTIONS 2 According the ICC, What documents a letter of Question credit require? Commercial invoice, Transport document, Insurance document, other documents such as: Certificate of origin, Answer packing list, etc Commerce Slides 31 TRANSLATE INTO VIETNAMESE/ENGLISH 1 The beneficiary shall be liable to check credit terms carefully In case of the beneficiary... dụng chứng từ và ràng buộc ngân hàng phát hành tuân thủ các điểu kiện của thư tín dụng  Payment for the goods shall be made by an irrevocable letter of credit This letter shall comply with the UPC600 binding issuing bank to comply with terms and condition of L/C Commerce Slides 36 •Cash in advance : trả tiền trước PHRASES Cash on delivery – COD : thanh toán khi nhận hàng Cash on delivery – COD : thanh... beneficiary does not agree with the terms and conditions or cannot comply with any of terms and conditions, he shall be liable to arrange for the amendments of the L/C through his contract partner (who has asked the bank to open L/C) Commerce Slides 29 PRACTICE Commerce Slides QUESTIONS 1 What is the clause billQuestion of lading? A bill of lading that shows a shortfall or damage in the delivered goods Typically,... terms and conditions 11 SIGHT/ DEFFERED L/C AT SIGHT DEFFERED - payable immediately – more or less – after the seller meets the requirements of 1 1 the L/C - The quickest form of payment for the sellers - The seller needs to submit documents to the bank (ex: a bill of lading) Commerce Slides 12 - Use the deferred payment - the seller allows the issuing bank a grace time to pay full amount 2 3 2 - It is... pay under a 1 L/C in favour of the seller - At least two banks guarantee payment - A confirmed LC is preferred when the seller is not able to ensure payment from the issue a L/C in favour of the seller 2 Commerce Slides 2 - Only the issuing bank guarantees 3 - The advising bank merely informs the payment 3 issuing bank - Costly 1 - The buyer instructs issuing bank to 4 seller of the L/c terms and conditions... shall make the first shipment within 30 days from the date the seller receives notification of an Irrevocable L/C which has been issued in his favour Commerce Slides TRANSLATE INTO VIETNAMESE/ENGLISH 34 2 The seller shall make the first shipment within 30 days from the date the seller receives notification of an Irrevocable L/C which has been issued in his favour Bên bán phải giao chuyến hàng đầu