What Is Letter of Credit

image38

Importance of “Letter of Credit”

 SAIUSA understands that as the global marketplace continues to expand, it becomes imperative that importers & exporters develop a clear understanding of what a Letter of Credit is: what it can and can’t do, and of the international practices which govern it, as stated in the Uniform Customs and Commerce (ICC) Publication 500. It should be noted that: The term “Letter of Credit” is used interchangeably with “Documentary Credits”, “Credits”, “Commercial Letters of Credit” and “Documentary Letters of Credit.” 

What is a Letter of Credit?

 

A Letter of Credit deals only with the documentary aspects of trade, not with the goods themselves, and banks are in no way bound by contracts or sales agreements upon which the credit is based, even though the merchandise may become collateral for further credit. The quality and quantity of the goods shipped, although possibly specified in the documents submitted to the bank as required by credit terms, ultimately depend upon the honesty and integrity of the seller or his agents, who has manufactured, packaged, cartoned or crated and arranged for shipment of the merchandise.

Letter of Credit, simply defined, is a written instrument issued by a bank at its customer’s request, the importer (applicant), whereby the bank promises to pay the exporter (beneficiary) for goods or services provided on the presentation of specified documents representing the supply of goods or services within the specific time limits, and meets all other terms and conditions set out in the Letter of Credit or Documentary Credit. However, the Letter of Credit will only contain those details which must be reflected in the documents to be submitted by the exporter.

SAIUSA’s Letter of Credit:

 

SAIUSA, apart from its specialized legalization/chamberization services, also caters to the freight community by providing a comprehensive and detailed Letter of Credit preparation service directly to freight forwarders, shippers and exporters throughout the United States territory.

  1. Expedited services with a two day turnaround time.
  2. Detailed reviewing and advising of L/C’s current status, terms and conditions, rules and regulations and necessary changes if needed.
  3. Preparation of all documents including B/L & AWB with a master document for the carrier.
  4. Providing separate copies to Shippers and Freight Forwarders.
  5. Top priority to expanding documentary credit.
  6. Banking support for quicker, faster and more reliable service.
  7. Expedited document legalization through its legalization department.
  8. Toll free number to check document status.

FOR VOLUME DISCOUNT PLEASE CONTACT US AT 1800-256-0656


What To? & How To?

You can reach us by calling toll free 1-800-256-0656. Use enclosed cover sheets that are essential with each file documentation. These cover sheets enable SAIUSA to clearly identify the required power of attorney to sign forms on your behalf. You can use our free pick-up/drop off service in cities where we have offices or use your favorite courier to dispatch documents to:  


                                                                         SAIUSA, 

                                                6575 west Loop South, Suite 500

                                                     Houston, Texas 77401

Letter of Credit Cover Sheet

 

You should also include original or good and clean copies of Letter of Credit along with all the amendments that are being made. We also need commercial invoice, airway bill or bill of lading, and/or freight forwarders name and contact number, shippers and any third party issued certification like survey reports, quality reports etc.

In the due process, we will also need the shipper’s banking information. The paying bank on the other end or on the L/C will be requesting this information. If this is not the case the bank will send a check instead of wire transfer which causes delay in the receipt of payment. Information required includes bank name, ABA number, physical address, account name as well as the account number.

SAIUSA’s purpose of publishing this information-based synopsis is to provide guidelines and basic understanding of Letter of Credit from an exporter’s point of view. In addition, we sincerely hope that this will serve as a handy reference tool and that you use SAIUSA’s services for Letter of Credit in all of your international trade transactions.