Understanding the Letter of Credit while moving

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Understanding the Letter of Credit while moving

• A letter of credit is a guarantee of the buyer to
  the seller about the payment that has to be made.
  The basic structure of the Letter of Credit
  consists of four elements Applicant (the buyer
  or the importer of goods), Beneficiary (the
  seller or the exporter), Issuing Bank (lends its
  guarantee or credit to the transaction), and the
  Negotiating Bank (beneficiary's bank).
• The letter of credit assumes that certain
  conditions would be met by the client or the
  buyer for the payment in question. This thing may
  be arranged by the customer (buyer, client) for
  the bill amount to the seller (beneficiary in
  this case, the transport company) for the
  services rendered. The payment is expected to be
  made on time. In cases there is a delay, the bank
  makes the payment of the balance amount on behalf
  of the buyer. Banks collect some percentage of
  the amount in the transaction as a fee. This fee
  depends on the amount requested for the deal in
  the letter of credit. This is significant to note
  here that the sales agreement between a buyer and
  seller is not a part of the credit letter. The
  letter of credit may only use the information in
  the contract.
• What does the LOC contain? It contains
  information about the agreement between the buyer
  (client) and the seller (Movers and packers). The
  deal includes charges for the move, the quantity
  of the goods to be transported and other matters
  regarding the time and distance for the shift.

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• 1. Sight Credit or Sight Letter of Credit

• 2. Acceptance Credit or Time Credit

This thing is a transaction that is done
immediately upon presentation of valid documents.
The needed funds can be taken right away. This
document specifies the payments that need to be
made for goods and services. For example, if a
particular company of packers and movers
Bangalore have offered to move your goods from
Delhi to Mumbai, the LOC will give the details of
how much is to be paid and when it is to be done.
It is a kind of agreement.
In this case, the bills have to be presented and
honored on their respective due dates. For
example, in some cases, the purchase and the
payment may take place on the same day. In other
cases, the payment may be made after some time.
This last period is called the usance for sale.
The buyer makes the payment on the stipulated
date of the LC.
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• 3. Revocable and Irrevocable Credit

• 4. Confirmed Credit

Revocable credit is where the terms and
conditions can be changed or even cancelled
without giving any prior notice to or getting the
consent of the beneficiary. The cancellation can
be made without any notice. A permanent credit is
just the opposite where the terms and conditions
cannot be changed or amended.  Letters of Credit
usually are irrevocable.
This type of credit is that one where a different
bank confirms the loan, i.e., a bank other than
the issuing bank. In this kind of deal, the
beneficiary will have a firm undertaking from
both the issuing as well as the confirming bank.
The bank that partners as a confirming bank,
become a part of the contract of the letter of
credit.
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• 5. Restricted Letter of Credit

• 6. Back to Back Letter of Credit

In this case, a specific bank takes on the task
to accept, pay, and negotiate the LC.
In this kind of LC, there is a second LC and
second beneficiary involved under the security of
the LC that is made originally.
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Bixmove packers and movers
7
Bixmove packers and movers

• Call US 8867247247 mail us
  info_at_bixmove.com Visit US
  https//bixmove.com/