Export letter of credit procedure

Based on the purchase and sales agreement between the buyer and the seller, the seller specifies the contents of the letter of credit that he will ask the buyer to issue at the buyer's bank. The initial status of the letter of credit is Preliminary.

Export letters of credit are maintained in the Export Letter of Credit (tcgtc0650m000) session, and domestic sales letters of credit in the Domestic Outbound Letter of Credit (tcgtc0650m200) session.

An authorized user links the relevant document to the letter of credit. This is to ensure that the document is processed in accordance with the terms of the letter of credit.

See Link and unlink letters of credit.

After linking the document or documents to the letter of credit, an authorized user approves the letter of credit by selecting Approve on the appropriate menu of the Export Letter of Credit (tcgtc0650m000) or the Domestic Outbound Letter of Credit (tcgtc0650m200) session.

Approving the letter of credit is mandatory. To continue the letter of credit procedure the user must approve the letter of credit.

If required, users can change approved letters of credit with specific statuses 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, or, in case of contract deliverables, to be activated.

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

Usually, at this point the seller asks the buyer to open a letter of credit at the buyer's bank as per the contents of the Definitive letter of credit.

When the letter of credit is received from the buyer through the advising bank, the seller checks if:

• He can meet the requirements of the letter of credit (L/C).
• The L/C is in accordance with the sales and purchase agreement.

If yes, the user must set the status of the letter of credit to Received.

If the letter of credit (L/C) received from the buyer requires amendment, the user must:

1. Unapprove the letter of credit.
2. Modify the letter of credit.
3. Set the status to Returned.
4. Return the letter of credit to the buyer.

If amendments are not required, the user can accept the letter of credit.

If acceptable, the user must set the status of the letter of credit to Accepted. This status allows the linked document to be released to Warehousing.

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

Set the status to Sent to indicate that the required documents are presented to the advising or confirming bank and that the goods are sent.

If the payment received against the sales invoices for the sales 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 is automatically set to Paid.

Users can also manually set the status to Paid.

After payment has been received, you can set the status to Closed.