Huaxing regularly organize staff to study foreign trade business, this study mainly conclude the characteristics of foreign trade documentary credit and the use of the process.Through continuous training to learn, Huaxing will provide you with more professional agricultural machinery to buy the distribution process.
So what is a documentary credit?In the event of international trade, the buyer and the seller may be mistrustful, the buyer is worried that the advance payment, the seller does not ship the contract requirements; the seller is also worried that the goods shipped or submitted after the buyer does not pay. So the need for two banks as buyers and sellers of the guarantor, on behalf of the payment of orders to bank credit instead of commercial credit. The tool used by the bank in this activity is the letter of credit.
The sale of international goods involving a single letter of credit usually involves the following process：
The buyer of the goods in his country to his bank (issuing bank) according to the bank's standard format to the seller of another country as a beneficiary to open a letter of credit. The letter of credit establishes a commitment to the issuing bank to pay the contract price of the goods or to accept or negotiate the seller's order (for example, a check) by that amount. The issuing bank may require the buyer to provide a security for the seller's expected payment liability, or may be dependent on the buyer's good standing. The standard condition for opening a letter of credit is usually to pay a fee for the goods to the bank and to the goods related to the shipping documents. Once the issuing bank agreed to open the letter of credit, he asked the seller's country to inform the seller of the seller to its beneficiary of the letter of credit opened. The advising bank may also be obliged to pay the seller, in which case the letter of credit is "confirmed" (on the contrary, "noncompliant"). The seller then submits the shipping documents (including the goods invoice, bill of lading or sea waybill, and the maritime insurance policy under CIF, etc.) to the advising bank. If the documents are prepared, the advising bank will pay the seller the payment by paying, accepting or negotiating the bill opened by the seller. And then notify the line of delivery documents will be submitted to the issuing bank, the issuing bank then to the buyer to pay, so that the buyer can accept the goods at the port of discharge. The issuing bank to open a letter of credit is a charge, of course, the final cost borne by the buyer.
We believe that in our continuous training and learning process, will virtually provide you with more convenient agricultural machinery trade services, look forward to your choice.