Letter of credit

A LETTER OF CREDIT is a comprehensive international payment instrument that can reduce the risks faced by importers and exporters in the sale and purchase of cross-border goods, products and services. A Letter of Credit (as Documentary Credit) is a written commitment to the beneficiary issued by the Guarantor (issuing bank) on request of an applicant guaranteeing the applicant’s fulfillment of certain obligations under the contract.

Key advantages for importers

Reduces the risks of international trade across the different countries
Lower cost
Allows the importer to avoid the advance payment or reduce the amount of advance payment (improving cash flow)
To conduct the business in accordance with its plan while controlling all trade processes including the loading and transportation of goods
Assure importer’s credibility to the exporter side
The exporter can get payment as soon as the goods are shipped while the importer can pay after receiving the goods
The Importer can refuse to pay when required documents under the Letter of Credit are not in comply with the terms and conditions.

Export L/C fees and commission

EXPORT LC	Fees and commission
Advising of L/C	USD 20.00
Document check and perform the payment	USD 50.00
Advising of amendment to term and condition	USD 10.00
Advising of cancellation of the LC	USD 25.00
Bank confirmation fee	According to the decision approved by the Credit Committee.
Dispatch document by courier	According to DHL tariff
Any other banking fees and commission	All banking charges shall be deducted from the account of the beneficiary.

Key advantages for exporters

Reduce the risks of international trade across different countries

Lower cost

The exporter will be able to secure payment of the goods by providing the documents that meet the terms and conditions as specified in the letter of credit.
Reduces production risk, if the importer terminates or changes their order
The exporter can obtain pre-financing from the bank after the goods are shipped until they receive payment (subject to post-payment terms) from the importer
The definite payment date allows the exporter to manage its cash flow effectively
Upon presentation of documents that comply with the terms of condition under the LC, the importer will not be able to refuse the payment of the underlying goods

Import L/C fees and commission

IMPORT L/C	Fees and commission
Issuance of L/C	USD 100.00
Document check and perform the payment	USD 50.00
Additional service (upon customer’s request )	USD 30.00
Amendment fee	USD 30.00
Cancelation fee	USD 30.00
Document discrepancy charge (per set of documents )	USD 50.00
Any enquiries at the request of the customer	USD 10.00
Risk commission rate per annum	2%-4%

Letter of Credit – Process flow

Financial advice