TYPES OF LETTER OF CREDIT & DETAILED LETTER OF CREDIT REVIE

Letter of Credit (L / C) This form of payment protects both the exporter and the importer and is very preferred because it includes...

Letter of Credit (L / C)

This form of payment protects both the exporter and the importer and is very preferred because it includes a control process by the banks regarding the fulfillment of special requirements, special requirements and agreements.

Letters of credit:

- Letter of Credit Officer (Aplicant, Orderer, Principal): Importer

Opening Bank, Issuing Bank: The bank of the importer

- Bank of Advising: Exporter's Bank

- Beneficiary: Exporter

Letter of credit Process

The process of letter of credit takes place as follows:

1. The importer's order to open a letter of credit to his or her bank,

2. The letter of the letter of credit, telex, swift to be sent to the denomination bank,

3. Reporting the letter of credit to the exporter,

4. Submission of the documents to the notification bank after the installation,

5. When the results of the documents or documents are positive, if the notice bank is also a confirmation and payment bank, the payment shall be made, if the document is not sent to the master bank for collection of the goods.

6. In case the letter of credit is unconfirmed, the documents shall be sent to the chief bank for the collection of the price of the goods;

7. Delivering the documents to the importer in return for the collection of the letter of credit,

ACCREDITORY SPECIES

a) Revocable, Revocable L / C

If the letter of credit issued is revocable, it can be revoked or amended by the letter of credit, its supervisor and the importer bank without informing the notice bank and thus the exporter. In this respect, it is a non-assured letter of credit for the exporter.

b) Irrevocable, Irrevocable Letter of Credit (Irrevocable L / C)

The letter of credit, which cannot be canceled or changed without the consent of the four parties present in a letter of credit, is called irrevocable letter of credit. If the conditions of the letter of credit are fulfilled, the exporter is a reliable letter of credit as he / she will collect the cost of the goods.

c) Uncurrent Letter of Credit (Unconfirmed L / C)

The letter of credit is sent to the letter of credit when the exporter gives the loading documents to his bank, and the bank sends the documents to the letter of credit to the bank.

In case of letter of credit and credit with an acceptance credit, the exporter's bank sends the documents to the bank of the importer as well as without making any acceptance or payment commitment. In the unqualified letter of credit, the exporter's bank does not assume any responsibility, in a sense it operates as an extended branch of the bank of the importer.

d) Confirmed L / C (Confirmed L / C)

In the approved letter of credit, the exporter can receive the cost of the goods when he sends the transfer documents to his bank, collects the money at the term letter of credit at maturity and accepts avalval from his bank at the acceptance loan. Another advantage of the letters of credit in the event of any dispute uygulanır.teyitl domestic law fills in Turkey maturity, unconfirmed term, to expire the importing country, it will have been exploited while sending documents. 

e) Rotary Letter of Credit (Revolving L / C)

If the importer is receiving the same kind of goods from the same exporter continuously, it is not necessary to bind the money by opening one year letter of credit. When a letter of credit is used, it is automatically renewed without the need for instruction.

f) Transferable L / C

If there is a word "transferable" in the letter of credit, the exporter can transfer this letter of credit to another. The transferable letter of credit can only be transferred once. In other words, the second beneficiary cannot transfer the letter of credit transferred to him / herself. This rule is for protecting the receiver.

If the letter of credit issued also allows for partial uploads (in this case, the letter of the letter of credit shall be "partial shipment allowed").

g) Back to Back Credit

In this case, the buyer opens a non-transferable letter of credit in favor of the importer.

If the exporter had opened the letter of credit with his own financing facilities, such an opposed letter of credit could not be in question. It is more expensive for the exporter to open mutual letter of credit than the transferable letter of credit. In order to obtain the content of mutual letters of credit, both sales and purchase letters of credit must be paid at the same bank. After the manufacturer uploads the goods and gives the documents to the bank, the profit portion of the sales letter of credit is separated from the exporter and the rest is paid to the manufacturer.

Subsequently, the sale letter of credit shall be collected from the counter bank. Of course, in order for the banks to be able to collect the price of the letter of credit, the duration of the sales letter of credit should be longer than the duration of the purchase letter of credit.

h) Advance Letter of Credit (Red Clause, Down Payment L / C)

In advance, all or part of the amount of the letter of credit shall be made available to the exporter without the shipment of goods. When a single payment is made on the basis of the letter of credit, the cash received must be deducted from the letter of credit. For partial uploads, it is necessary to specify which downloads or uploads are to be deducted.

Advance letter of credit is guaranteed or not guaranteed. Without guarantee, the exporter's bank pays him in advance, without obtaining a guarantee from the exporter. If the export does not take, he / she collects the money paid from the supervisor bank. The guarantee is guaranteed by the exporter for the advance part paid. If the export is not received even if the foreign exchange is received, it must be returned within 1 year according to the foreign exchange's foreign exchange legislation.

ACCREDITATIONS ACCORDING TO THE PAYMENTS

a) Pay-by-View Letter of Credit (Sight L / C)

When the documents in such letter of credit are seen; in the letter of credit of the exporter, and in the bank of the importer.

b) Term Letters of Credit (Deferred L / C)

The customer is assigned a term of maturity at the end of the term. When there is a valid letter of credit, the cost of goods is allocated from the domestic bank at the end of the term and in the unqualified letter of credit from the importer's bank. In this case, a letter may be received from the bank that the cost of goods will be received after a certain period of time.

However, as such a document is not a negotiable paper, it does not break policy. Since the cost of goods will be allocated at the end of the maturity, the importer does not have to pay the cost of the goods by claiming that the goods are not quality. If the exporter wants to collect money without waiting for the due date, the buyer has to issue a term policy on behalf of the bank.

c) Letter of Credit (Acceptance L / C)

If the exporter wants to break the term policy taken on behalf of the bank, the amount of cash can be reached by advancement.

d) Letter of Credit (Standby L / C)

In the types of letter of credit we have seen so far, a letter of credit was issued and the price was collected in exchange for a job. In case of non-fulfillment of the work, letter of credit is used. For example, a Turkish company participates in a tender in Libya. When the Turkish firm wins the tender, if it fails to fulfill the tender on time, it will open a letter of credit for use by Libya. This type of letter of credit is a letter of guarantee.