Letter of Credit is a sales contract stating that payment will be made by the L/C between the vendor and the purchaser. Sales contract information is recorded by Letters of Credit option located under Import > Main Records.
Letter of Credit definition window opened by "New" option located in Letters of Credit browser includes the following fields:
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File Code and File Name fields are used to relate the L/C record to the Import Operation Slip.
File name and code for which the L/C is opened is entered in these fields. In both fields, import operation slips are listed and the relevant slip is selected. Since the Letter of Credit is a contract, users are allowed to save the L/C record without selecting an import operation slip. After the bank approves the L/C, the relevant import operation slips can be related to the record.
There can be multiple records having the same import file code (Import Operation Slips related by Export to File option). This file info is listed in "Import Files" tab.
The Letter of Credit information is recorded under the following headings:
- General Info
- Bank Info
- Other Info
- Requested Documents
- File Info Details
General Info
The following information is recorded under The L/C General Info tab:
Transaction / Reporting Currency, F. Currency, Exchange Rate and Total fields are used to enter currency and exchange rate information over which the L/C will be processed. Amount is calculated over the specified exchange rate info. Currency type and exchange rate info of the first selected import file is displayed in transaction currency and exchange rate fields as default.
The total amount of all invoices related to the file is displayed in transaction currency total field in the transaction currency type.
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Insurance Coverage: This field indicates how the relevant goods sent to the importer are insured against the possible loss or damage risks. It has three options:
- By Our Insurance Company
- By Issuing Bank
- By AR/AP
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Letter of Credit Usage: It indicates when the L/C will be used. It has three options:
- At Sight of The Requested Documents
- After Loading The Documents on The Vehicle
- After Presenting The Documents to The Issuing Bank
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Green Clause: It is a Letter of Credit type. Green Clause C/L provides the opportunity to have advanced payment prior to the shipment of goods. He delivers a part of these goods to either a public warehouse or a third party warehouse, and the beneficiary is paid at sight of the delivery receipt.
Bank Info
The L/C Bank Information is entered under Bank Info tab located in L/C definition window.
Bank Info tab consists of two sections: Bank Info and Credit Info. Bank information entered in the L/C definition window is as below:
Issuing Bank Info
Issuing Bank is generally importer's bank and issues the L/C upon the instruction of the importer.
The relevant bank is selected from Banks browser accessed over the Bank Account Code and Account Name fields. Transaction currency selected in the General Info tab must be the same with the transaction currency selected for the bank account. Otherwise, user is warned.
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Letter of Credit Payment: The payment type is specified in this field. It has three options:
- Cash
- On Credit
- Cash + On Credit
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Reimbursement Bank Name and Address: Reimbursement bank information is entered under Reimbursement heading. (In cases that there is not an account relation between the L/C bank and the payment bank, Reimbursement Bank steps in the process. Upon the instruction of the Issuing Bank, it pays the L/C amount, and debits the Issuing Bank. Reimbursement Bank makes payment on request without going further into the details of the L/C transaction.)
Credit Info
If "On Credit" or "Cash + On Credit" option is selected in Letter of Credit Payment field, credit information which will be used in the L/C payment is entered in Credit Info tab. Credits belonging to the Issuing Bank account are listed, and a credit which is in force, is selected from the list. Currency type of the bank account is saved in Currency Type field.
Other Info
Domestic and foreign surcharges of the export and import L/C, shipment address and similar information is recorded in Other Info tab of the L/C definition window.
Domestic and Foreign Surcharges: Parties who will cover the surcharges are entered in these fields. They have two options:
- Belongs to Company
- Belongs to AR/AP
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Notifying Bank Commission: This field refers to the party who will pay the notifying bank commission. It has two options:
- Belongs to Company
- Belongs to AR/AP
The party who will pay the commission is selected.
Commission Rates
Commission rates are entered for the Issuing Bank and the Notifying Bank in this section.
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Transport Type: It refers to the vehicle which will be used in delivery. Transport type specified in the import file is transferred to this field, and it cannot be changed.
To Transport Company
Delivery point and delivery date notified to the transport company are entered under this heading.
Requested Documents
The relevant documents requested for the L/C to be in export or import operations are recorded under Requested Documents tab in the L/C definition window. Documents are listed and selected in Document Code and Description fields. The number of documents are entered in Number of Originals and Number of Copies fields.
File Info Details
All import operation slips related to the import file selected in "File Code" field in the L/C definition are listed in detail under File Info Details tab.