Import letter of credit procedure

Based on the purchase and sales agreement, and the L/C requirements from the seller, the buyer draws up a draft letter of credit. The status of the initial letter of credit is Preliminary.

Import letters of credit are maintained in the Import Letter of Credit (tcgtc0650m100) session, and domestic purchase letters of credit in the Domestic Inbound Letter of Credit (tcgtc0650m300) session.

When the letter of credit is satisfactory, an authorized user links the relevant document to the letter of credit. This is to ensure that the document is processed according to the terms of the letter of credit.

These documents are available for import or domestic purchase letters of credit:

• Purchase orders
• Purchase order lines

See Link and unlink letters of credit.

After linking the document or documents, the user approves the letter of credit by selecting Approve on the appropriate menu of the Import Letter of Credit (tcgtc0650m100) or the Domestic Inbound Letter of Credit (tcgtc0650m300) session.

Usually, at this stage the buyer uses the approved letter of credit to officially request his bank to open a letter of credit. Approved letters of credit cannot be changed, but if required, you can change an approved letter of credit by selecting Unapprove on the appropriate menu.

See To change letter of credit data or status.

To continue the procedure, the user must set the status of the letter of credit to Definitive. This allows the linked documents to be approved.

Document compliance checks are performed to verify if the document and the receipt meet the requirements of the letter of credit. See Compliance checks for documents linked to letters of credit.

When the buyer has sent the request to open a letter of credit to the issuing bank, the user must set the status of the letter of credit to Requested.

When the letter of credit is received from the issuing bank for final approval, the user must set the status of the letter of credit to Received.

When the issuing bank has issued the letter of credit to the advising bank, set the status of the letter of credit to Issued.

This status allows the linked document to be released to Warehousing.

When the document is released to Warehousing and when the receipt related to the document is confirmed, document compliance checks are performed to verify if the document and the receipt meet the requirements of the letter of credit. See Compliance checks for documents linked to letters of credit.

If the payment made for the purchase order lines linked to the letter of credit is equal to the maximum amount of the letter of credit, the status of the letter of credit (L/C) is automatically set to Paid.

Users can also manually set the status to Paid.

After payment is made, the user can set the status to Closed.