x The parties involved in international payment transactions need to learn about the method of L/C Usance has the advantages and characteristics, when to use it?
x You do not have much experience in applying for LC, so you need to learn about the profile to prepare for?
x You want to know how many steps do the Usance L/C process go through?
The knowledge to know about what LC usance is and the relevant regulations will be Proship.vn in the framework of this article. At the same time, the importers and commodity exporters also grasp the process of how the USance L/C payment steps are done.
What is the common characteristic of L/C payment? What is L/C Usance?
Want to know what LC Usance is, first need to find out what LC's characteristics in international payment are:
General characteristics of L/C
L/C is an economic contract between the issuing bank and the beneficiary (exporter), showing a firm, non -destructive commitment of the issuing bank on the payment to the exporter when this person produces a set of documents in accordance with the conditions and terms of L/C with UCP (The Uniform Custom and Practice for Documentary Credit) and with ISBP (International Standard Practice Princice).
L/C is independent of the grassroots contract (Foreign Trade Contract) and the goods, the payment of the issuing bank is only based on the presentation voucher without depending on the performance of foreign trade contracts (which is the basis for opening L/C), the actual situation of goods, or other implementation.
In L/C transactions, the basic functions (operations) of banks mentioned in the UCP include: issuing, notifying, paying, negotiating discounts, accepting bills, committing to deferred payment, confirmation, transfer and refund.
What is LC Usance?
Upas L/C = Usance Paid at Sight = Usance L/C. So, Usance or Upas LC is a delayed return letter with a special provision that allows the beneficiary to be paid immediately (Normal Upas LC) or payment of a specific day before the maturity date (Deferred Upas LC).
What is the advantage of LC Usance? When should I use Usance L/C?
What are the characteristics and advantages of LC USACE and when should I use USance L/C payment? The following total Proship content will give you the answer:
Features of Usance LC
- Terms of negotiation:
Delayed payment time may negotiate and vary depending on the agreement between the buyer and the seller. Delaying time is usually ranging from 30 to 120 days.
- Payment postponed:
LC deferred payment allows buyers to postpone payment until the deferred payment term has expired.
- Financial tools:
Fast payment can be used as a financial tool for buyers, allowing them to use credit term to generate income from purchased goods before payment.
- Flexibility:
LC payment is very flexible for buyers by giving them time to check the goods before payment.
Advantages of L/C Usance
Advantages of LC USance payment:
- The buyer (importer) is entitled to a deferred payment policy with reasonable cost;
- Seller (exporter) is paid immediately, not paying any fee;
- LC USANCE payment is safe for both exporters and imports. If the customer is the importer, there will be more opportunities to cooperate with reputable suppliers with competitive prices;
- Competitive fees compared to other payment methods, fast handling, information security;
- Financial cost prizes for businesses in the context of limiting access to loans in foreign currencies.
When to use L/C Usance?
Should use L/C Usance payment when:
- The importer is limited financial, it takes time to collect money before payment. L/C Usance is flexible in paying over time;
- It is necessary to agree on flexible payment time between exporters and importers.
What is the LC opening application? How is the process of implementing the USance?
Proship lists the documents to be prepared when applying for LC and the USance LC process is done as follows:
What is the application for L/C?
L/C opening records include:
- Application for opening L/C immediately or L/C deferred payment;
- Payment vouchers attached to UNC;
- Application for guarantee cum debt receiving certificate if the bank receives guarantee for L/C has a fund of less than 100%, or a set of property mortgages, ...
Process of implementing L/C Usance
The process of implementing upas/Usance LC is as follows:
- Step 1:
Signing foreign trade contracts between exporters and imports, the two parties agreed to use upas or USance L/C payment methods.
- Step 2:
Open Upas or Usance L/C: Importer requires the Bank to issue Upas or USAVER L/C according to the terms agreed upon for the exporter (beneficiary).
- Step 3:
The issuing bank announced the establishment of Upas or USance L/C to the bank notification.
- Step 4:
The bank announces the upas or USance L/C notification to the exporter.
- Step 5:
Exporters deliver goods to importers.
- Step 6:
Exports set up a set of documents at the request of Upas or USance L/C and produce valid vouchers to the bank notification.
- Step 7:
If appropriate documents:
(7A): The bank notifies a return request to the bank to return.
(7B): The bank announced that it will send to the Bank for issuing Upas or USance L/C the original documents of the shipment.
- Step 8:
The return bank receives a bill of exchange will comply with the authorization with the issuing bank, that is, the discount of the bill of exchange, immediately pay the exporter through the notice bank.
- Step 9:
The bank announces the report on the exporter's account.
- Step 10:
The bank returned to notify the issuing bank that the bill was presented and discounted. At the same time, it also announced the maturity date of the bill of exchange and the fees related to the discount of the bill of exchange to the issuing bank.
- Step 11:
The issuing bank checks vouchers and notifies the importer on the maturity date and all the fees. The issuing bank assigns documents to the importer to receive the goods. In this step, the importer has not had to pay a bill of exchange and a bank fee.
- Step 12:
When the bill of exchange maturity, the issuing bank will pay the bank to return the money on the bill of exchange and the incurred fee. After that, the issuing bank will ask the importer to pay the bill of exchange and the costs incurred.
What is the method of payment , what are the advantages of outstanding characteristics, how the Usance L/C implementation process, which documents should be prepared when applying for LC, ... shared above. Any questions related to common international payment methods, contact 0909 344 247 for answers and advice, quick quotation of cheap multimodal transport services available only at Proship Logistics.
