Settlement and Transportation Details
The second part of the Import L/C application form contains the Settlement Data information of the L/C and requests the following information:
There are three settlement Payment options that specify the way payment is made on presentation of all the required documents:
To complete the application, select the payment method by selecting (clicking) one of the Payment check options (radio buttons).
If the payment is by Installment, define a payment schedule.
· Installment - The value of the L/C is payable according to an installment schedule.
· Time - The value of the L/C is payable on a specified date (Due Date), or after a period of time (Tenor Days) and a condition has been fulfilled (Draft After).
· Sight - The value of the L/C is payable immediately on presentation of the required documents.
· After Draft Date - When payment is due after the date written on the draft.
· After B/L Date - When payment is due after the date written on the Bill of Lading.
· After Custom Clearance - When payment is due after the goods clear customs.
· After Goods Pass F.D.A. - When payment is due after the goods have been cleared by the Federal Drugs Administration.
· After First Presentation (of documents). - When payment is due after the documents reach the bank where the funds are available.
· After Arrival of Goods - When payment is due after the goods arrive at the destination. This depends on the shipping terms.
· After Date of Invoice - When payment is due after the date written on the Shipping Invoice.
· On Sight - When payment is due after the goods arrive. The responsible party must see the goods and check all documents first.
· After Dispatch of Goods - When payment is due after the goods have been sent.
· Days for Presentation - Specifies the number of days the documents can be presented for payment following the date of the transportation documents. The default time is 21 days, in accordance with I.C.C. regulations. The Days for Presentation and Latest Shipment Date may not exceed the Expiry Date.
· Available With - Specifies which bank is authorized to negotiate the documents on behalf of the beneficiary. Authorized banks include:
· Advising Bank. - The Beneficiary's bank
· Any Bank (only if the Settlement By is specified as Negotiation) - the Exporter may present the Letter of Credit to any bank, and that bank will buy the title, pay the bearer and arrange reimbursement.
· Issuing Bank - The Applicant's bank
· Reimbursing Bank - An Intermediary bank that operates as a go between the Advising bank and the Issuing bank.
· Settlement By - Specifies how payment is made for the deal, and varies according to the payment method. This is important to the beneficiary since it determines how the L/C is paid. The following are the available options:
· Payment - The customer receives the documents at payment.
· Deferred Payment - Payment is made at a specified date in the future.
· Acceptance - The customers accepts the documents and a future pay date.
· Negotiation - The purchase by the nominated bank of drafts (drawn on a bank other than the nominated bank) For you as a customer it means the same as by payment
· Mixed Payment - When more than one of the above methods are used.
Note: As the precise definitions of these terms are extremely complicated, no attempt is made here to define them. Refer to UCP 600 for further details.
· Draft Drawn On - Specifies the drawee of drafts under the L/C (if required). Valid parties include:
· Advising Bank - The Beneficiary's Bank.
· Applicant. - The person who applies for the L/C.
· Issuing Bank - The Applicant's Bank.
· Other - Any Intermediary , or the Beneficiary Bank if it is not the Advising Bank.
Note: There is a strict link between the selected Settlement method, and the Draft Drawn on field. For example, no value is allowed in this field for Payment or Deferred Payment. Refer to your bank for further details.
· Forward Contract - If the L/C is tied to a forward contract, the contract number is specified.
· Incoterm - An international code defining where responsibility for the goods starts and ends, and which party is responsible for the various charges.
· Transportation Type - Specifies the mode of transport used to send the goods detailed in the L/C. Some examples of Transportation methods may include: air, combined transport, overland transport, parcel post, sea and etc.
· Shipment - Options specifies the location from which the goods are sent, and the destination of the goods. The Earliest field specifies the earliest date the goods can be shipped. The Latest field specifies the latest date the goods must be shipped.
The days for presentation and latest shipment date may not exceed the expiry date.
The Installment Instructions section appears in this part of the Import Letter of Credit application form. Scroll down from the Settlement Data to access these fields.
When the settlement Payment Option that specifies the way payment is made on presentation of all the required documents is by Installment, the L/C is payable according to an installment schedule. This section describes those options.
The (Payment By) Installments portion of the application page displays the following details:
· Amount - The amount of the payment due in the specific installment.
· Tenor Day - The number of days after a certain event that payment is due.
· Due Date - The date the payment is due.
To add an installment payment, click the Add button. A new row appears in the window. Enter the Amount and Tenor Days or Due Date, as applicable.
To delete a required installment payment, select the payment entry record and click on the Delete button.
· Check Installments Sum - Enable the Check Installments Sum check box to issue an error if the sum of all installments is not equal to the value of the L/C.