As a seller, the process of dealing with a Letter of Credit (LC) involves several steps to ensure that the transaction is carried out in a secure and efficient manner. Here are the general steps involved in dealing with an LC from the seller’s point of view:
- Request for LC: The seller receives a request from the buyer to deal with an LC as a payment method for the transaction.
- Review the LC terms: The seller reviews the terms and conditions of the LC to ensure that they are able to meet the requirements and obligations.
- Confirm the LC: The seller confirms with their bank (advising bank) that the LC has been received and is valid.
- Prepare and ship goods: The seller prepares and ships the goods to the buyer, ensuring that they are shipped in accordance with the terms of the LC.
- Provide required documents: The seller provides all the required documents, such as invoices and bills of lading, to the advising bank for verification and forwarding to the issuing bank.
- Verify documents: The seller verifies that the documents presented by the advising bank are in accordance with the terms of the LC.
- Payment: Once the documents are verified and accepted by the buyer, the issuing bank releases payment to the seller through the advising bank.
It’s important to note that the seller should seek professional advice and guidance from their bank or financial advisor to ensure that all the necessary steps are carried out correctly and in a timely manner. This will help to ensure a smooth and secure transaction for both the seller and the buyer.
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