Letter of Credit is the most common way for payment of goods and services in trade relations. The Credit Letter represents the obligation of the bank to provide the client with the payment that the credit card provides after fulfilling the conditions of the latter. Credit letters are usually used when business partners do not know each other and want to eliminate business risk.

 

The seller is in the quality of the exporter

How to proceed with the Application for Letter of Credit:

EM Credit Card The seller (Beneficiary) is in the quality of the exporter. ISA Bank, in the capacity of consulting bank advises the seller of the Letter of Credit eg. written notice of the issuing bank to pay the seller the amount of the Letter of Credit immediately upon fulfillment of the conditions set out in the Letter of Credit. Confirmation of the Letter of Credit by ISA Bank upon the application of the Bank that issues the Letter of Credit represents the responsibility of the confirmatory bank (in addition to the liability of the issuing Bank) to pay the seller the amount of the Letter of Credit (immediately upon completion of conditions).

 

The Letter of Credit maybe transferable

The Letter of Credit maybe transferable

The Letter of Credit may be transferable and gives the seller the right to transfer all rights and obligations deriving from the Letter of Credit (or part thereof) to his / her subcontractor (second beneficiary). The issuing bank should clearly identify a transferable Letter of Credit. Transfer of Credit Letters is usually used by business companies or intermediary companies. Letter of Import Credit Letter of Import Credit – the buyer (applicant) is in the quality of the importer. Based on the written application of ISA Bank, as a issuing bank offers in writing an irrevocable venture on behalf of the buyer, to pay the buyer the amount of the Letter of Credit immediately upon fulfilling the terms of the Letter of Credit. Benefits for the Seller

  • In the case of a foreign Credit Card, the foreign or country risk may be eliminated when the local bank confirms the Letter of Credit. Based on this confirmation, the confirming bank undertakes to execute the payment after fulfilling the terms of the Letter of Credit.
  • After the bank announces the opening of the Letter of Credit, the seller can make the delivery of the goods / services
  • Opportunity to provide a loan provider in the case of a variable term loan (which is postponed later) and sale of goods before the maturity date – confiscation.
  • Legal Protection through the Customs Standard Practices for Documentary Credits, issued by the International Chamber of Commerce in Paris, no. 600/2007.

Benefits for the Buyer

Benefits for the Buyer

  • The Letter of Credit guarantees the buyer that he will pay only after fulfilling the terms of the letter of credit.
  • The Letter of Credit is based on the proper selection of the required documents, guarantees the buyer that the goods will be shipped in time, quality and quantity required.
  • Possibility of combination with bank guarantee issued by seller’s bank.
  • Legal Protection through the Customs Standard Practices for Documentary Credits, issued by the International Chamber of Commerce in Paris, no. 600/2007.

How to proceed with the Application for Letter of Credit:

How to proceed with the Application for Letter of Credit:

  • Applicants complete the form for opening Documentary Letter of Credit.
  • The buyer submits the corresponding copy of the contract or Letter of Credit form
  • The Bank then issues the Letter of Credit Documentation according to the instructions provided in the Letter of Credit Application Form and informs the seller of its obligations by means of a SWIFT message sent to the seller’s bank.

Bank guarantee:

  • Auction Guarantee;
  • Advance Guarantee;
  • Good security
  • Paid Guarantees
  • Other warranties

Documentary Collection: It represents the way of payment for goods or services. Used in foreign trade when it is not possible or appropriate to issue a Document Letter of Credit, but a payment guarantee greater than the pure payment guarantee is required.