
The Documentary Letters of Credit (LC) Process
1. Importer & Exporter negotiate terms of the
contract
2. Importer instructs their bank, the Issuing Bank,
to open a LC in favour of the Exporter
3. Importer's Bank, the Issuing Bank, issue the LC
to the Exporter's Bank, the Advising Bank
4. LC is received by Advising Bank which checks the
LC, then passes it on to the Exporter
5. Goods are shipped
6. Shipping documents are prepared and submitted to
the Advising Bank by the Exporter
7. Advising Bank checks the documents. If they
comply with LC they send the documents to Issuing
Bank and may pay the Beneficiary/ Exporter in
advance of being reimbursed by the Issuing Bank
8. Issuing Bank checks documents again, if correct
they are released to Importer and the Importer's
account is debited
9. Issuing Bank reimburses Advising Bank
10. Payment sent to
Beneficiary/Exporter if this didn't occur in stage
seven
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