L/C

payment mechanism

the issuing bank irrevocably

promises to pay the seller

offers protection

buyer

seller

buyer

seller

Very secure method payment

More expensive than other methods

Commercial Invoice (proof value)

Bill of Landing (proof of shipment)

Packing List (proof of packing)

Certificate of Origin (proof of origin)

Inspection Certificate (proof of quality)

Insurance Certificate (proof of Insurance)

Health Certificate of Phytosanitary Certification

Consular Invoice or Legalized Commercial Documents

Draft or Bill Exchange(Negotiable instrument to be given to the bank in order to get paid)

Buyer

High degree assurance

Goods will be delivered

reduce risks

experts support

can obtain better terms & prices

no payment before

Sellers

Can have problems

impossible delivery times

unacceptable costs

try modify terms of L/C

interruption in operations

discrepancies documents presented

can cause issuing bank cancel L/C