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Raw Meat and Fully Cooked Products
IMPORT - EXPORT
Worldwide
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PAYMENTS

The accepted method of payments are:  
 
  • Direct Payment
  • The Letter Of Credit, (LC), irrevocable, payable at sight.
  • Payment Against Documents
     
The Letter Of Credit, (LC)    
     
This transaction protects both the Importer and the Exporters as Banks take places of Importer and Exporters in process of exchanging the documents on the shipment and the money, but requires some extra efforts from the importer's side and, in most cases, freezing the Importer's funds in the Importer's bank on a special (additional) Importer's account. Of course, it cost some amount of money, somewhere of US$250.00-$500,00, which may consist 1% to 2% of value of the cargo.
  The Example procedure may work like this:
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1.

After Prices, Quantities, Time of Shipment, Transit Time, Documents Requirements and all other Terms between Importer and Exporter are agreed, the Importer submit PO to Exporter. Exporter issues Proforma Invoice.

   
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2.

The Importers goes to his International Bank (IB) and applies for a Letter of Credit (LC), also called Documentary Credit. He called Applicant or Opener. The Bank may or may not to freeze (secure) the sum equal of payable amount in the Importer's account until it is payable. To make possible to freeze specific amount of money, the Importer may require to open an additional account in the Importers Bank for sole LC purpose only. Importer does not have access to this money - only bank can transfer this amount to the Exporter when it will become payable or return to the Importer in case of the deal is off.

Along with application the Importer advises his IB of the documents he (Importer) will require from the Exporter. It may be, for example:

   
  • Full set of clean, on-board, ocean Bills Of Lading, issued "to order"
  • Commercial Invoice, original and five copies
  • Packing List (Packing Slip), original and five copies
  • Certificates as required and agreed
  • Certificate of Insurance (on CIF shipment)
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3.

The IB put the requirements into letter form and sends the letter to a Exporter's bank. This letter may be transmitted via mail, telex or SWIFT. This IB called Opening or Originating Bank.
 
4.
The Exporter's Bank sends the original Letter of Credit to the Exporter. In this case Exporter's Bank called Advising Bank as the EB advising the Letter Of Credit to the Exporter.
 
5.
The Exporter manages to ship the product in such exact way as to comply exactly with the Letter of Credit.
 
6.
Following shipment, the documents proving that shipment was made, and made in conformance with the Letter of Credit, are sent or delivered to the EB.
 
7.

If there is no difference between LC and documents submitted by Exporter, the EB receives funds from the IB and pays the Exporter, called beneficiary of Letter of Credit. In case of difference between documents and LC, the EB issues Discrepancy Letter and send it to IB for Importer's discretion. Importer have to decide to accept or deny difference(s). After Exporters been paid, documents are sent to the IB for ultimate delivery to the Importer in exchange fore the funds that had been secured by IB since LC was opened.

It is very important what to put on the Letter of Credit. As the final word of transaction, both parties need to know exactly what each other else needs before Letter of Credit is issued. Amendments can be made, but they cost money at both the opener's and at the beneficiary's end.

 

 

 

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