Documentary Letters of Credit are used as a payment term for centuries to facilitate global trade deals. Mostly, LC Terms and Conditions are governed by the ICC and UCP for Documentary Credits. There are certain LC Terms and Conditions that every buyer needs to be aware of when using LC as the payment term for global trade.
Letter of Credit is the written undertaking issued by a bank upon request of its clients to conclude their trade deals. Further, this LC issued on behalf of the buyer & in favor of the seller acts as an assurance of payment towards the seller. Further, there are some risks involved in trading including trust issues, distance, different laws, and rules in each country. Using LC as the payment term can reduce the risks involved & now became a vital aspect of global trade.
Further, by having MT700, buyers have the security via documents; since, that verifies the quantity of goods; before making the payment to the seller. Also, on the other side; sellers are assured that they will receive the payment. Also, only if they comply with the terms of the issued MT700.
Applicant
The one who requests their bank to issue MT700 on their behalf. Further, they can be a buyer or an importer.
Advising Bank
The bank receives an MT700 from the buyer’s end. Further, they forward it to the seller.
At Sight
Under an LC at Sight, it means payment is to be made upon submission of documents as stated in the issued LC. Moreover, this acts as a popular method of payment for global trade.
Back to Back LC
A beneficiary of an MT700 opens up new Letters of Credit from their bank on the basis of the LCs, they have received. Further, this helps the traders to continue their trade globally.
Beneficiary
The one in whose favor an MT700 issued. Mostly, in imports and exports, the seller is the receiver.
Bill of Lading
A document issued by a transport carrier; also, shows the receipt of goods for shipment by sea, air, or by road to a certain place. Further, it also serves as the contract between the shipper and the transport carrier.
Certificate of Inspection
A document states that goods were in good condition at the time of inspection. Also, pre shipment inspection is often required in global trade.
Certificate of Origin
A written statement by the Chamber of Commerce to verify the origin of goods. Moreover, this contains info about the product, its destination, and the country of export.
Confirming Bank
This may confirm the LC to the seller. Also, upon request from the issuing bank, they are obligated to make the payment, and this should be under the issued MT700.
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Deferred Payment LC
Payment under this is made a no. of days after shipment. Or, after the submission of documents after a period stated in the issued Letters of Credit.
Incoterms
The Trade terms defined by the ICC define the duties of the sellers and buyers in global trade. Further, this specifies who is responsible for the shipment, insurance, customs, and other supply chain activities.
Issuing Bank
The Issuing Bank provides an assurance to the seller that they will receive the payment; also, this will be done; only if they submit the stated documents that comply with the T&Cs.
UCP 600
The Uniform Customs and Practice for Documentary Credits (UCP 600) defines a set of rules governed by the ICC. Further, this needs to be followed by all institutions which issue the Letters of Credit.
To avail of MT700, you need to request your bank with your pro forma invoice. Further, they will perform a study on their client’s credit score and fiscal strength. Moreover, if the client meets all the terms, they will approve their request. In case, if they didn’t, then the bank will say NO to provide the MT700. Also, in such a case, they may look for other options to avail MT700.
So, to help the clients to facilitate their imports, Bronze Wing Trading L.L.C., the LC Providers in Dubai works for you! Also, we provide MT700 to help importers to reduce their fiscal risk. Further, we help the traders to facilitate their trade with minimum investment by providing LC at ZERO Cash Margin!
Avail Letters of Credit – LC MT700 from us to get started with your global imports!
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