国际贸易实用英语 作者 姜宏 Unit 3 Letter of Credit.pptVIP

国际贸易实用英语制 作 人： 姜宏制作时间：2010年9月1日 Unit 3 Letter of Credit 信用证 Objectives To learn different modes of payment and advantages of L/C To know the working procedures of letter of credit To be able to apply for opening an L/C To be able to analyze L/C terms and conditions 3.1 Discussing Mode of Payment 3.1 Discussing Mode of Payment Letter of credit (L/C) is a document issued in international trade. It works like this. The buyer asks his bank to open a credit in the seller’s favor. A credit is a sum of money on the books of a bank. Being in the seller’s favor means it belongs to the seller. Then a bank in the seller’s country is contacted. The buyer’s bank issues a letter of credit and sends it to the seller through its correspondent bank in the seller’s country. The letter of credit lists documents which the seller must give to his bank before they will pay him. Usually these documents show that the goods are on their way to the buyer. They might be an invoice, insurance policy and bill of lading. So the goods would have to be named, insured and on board ship before the seller could receive payment. Advantages of Letter of Credit From the perspective of the exporter, letters of credit have four primary advantages over sales on open account. First, with a letter of credit, the creditworthiness and financial integrity of the bank is substituted for that of the importer, and exporters see less risk of nonpayment when the bank is the guarantor. Second, as soon as the exporter meets the terms and conditions specified in the L/C, payment is assured. As long as the paper documents are in order, the bank is obligated to pay even if the importer no longer wants the merchandise or finds it unsuitable or damaged. The third advantage of a letter of credit over an open account is that the exporter can usually obtain payment as soon as the necessary documentation has been provided to fulfill the contract. By shortening the collection period, fewer funds have to be tied up in w