Letters of Credit (LC) Documentary Credits

1. Introduction to International Payment Methods
2. Countries and payment terms
3. Bills of Exchange
4. Bank Draft
5. Bank Transfer
6. Bank payment obligation (BPO)
7. Open Account
8. Clean collection
9. Documentary Collections
10. Letters of Credit (L/C)
    1. Types and modalities
    2. Terminology
    3. Opening a letter of credit
    4. Availability
    5. Contents of the letter of credit
    6. Documents
    7. UCP 600
    8. Electronic L/C (e-UCP)
    9. Analysis of Documentary Credits
    10. Import letters of credit
    11. Case Study: Facilitating International Trade through Letter of Credit
    12. Case Study: Safeguarding Trade with Letters of Credit

AI for Global Business

1. AI and Global Trade
2. AI in Global Strategy and Decision-Making
3. Digital Trade and Cross-Border E-Commerce
4. AI in Global Finance and Risk Management

The Subject “Methods of payment/Letters of Credit” objectives at:

1. Analyzing the various methods of payment used in International Trade and outlining their differences, advantages, and disadvantages both for the Importer and the exporter
2. Understanding what documentary collections are and how they work. Export and import collections will be analyzed
3. Understanding the following:
   1. Importance of Documentary Credits and letters of credit in International Trade
   2. How Documentary Credit works
   3. Obligations of the involved parties
   4. How import documentary credits operate

In this subject:

1. We will examine how to receive and effect payment for an international sales contract
2. The student will become familiar with the parties, obligations, and the key terminology used in documentary credit operations
3. As well as, student learns about the key checklists to take into account when preparing the documents for presentation under a documentary credit

The focus will be on the export methods of payment. The information presented here is also applicable to  import transactions.

The selection of the most suitable method of payment is a key factor of a successful export sale.

Legislative texts related to International payments, United Nations Commission on International Trade Law (UNCITRAL).

1. United Nations Convention on Independent Guarantees and Stand-by Letters of Credit
2. UNCITRAL Model Law on International Credit Transfers
3. United Nations Convention on International Bills of Exchange and International Promissory Notes
4. United Nations Convention on Transfer of Credits in International Trade

Documentary Collection

1. Documentary collection
2. Clean Collection
3. Bill of Exchange
4. Managing collections
5. Documentary Collection Simulation

Objectives:

1. To learn the differences between clean and documentary collections and analyze the advantages and disadvantages for the importer and the exporter
2. To find out how to complete a Bank Documentary Collection order and how to manage export collections at the Bank
3. To understand the difference between documents against acceptance and documents against payment

The Subject “Methods of payment / Letters of Credit” is included within the curriculum of the following academic programs at EENI Global Business School:

Masters: International Business, Foreign Trade.

Doctorate: Global Trade.

Postgraduate Certificate in International Trade.

Languages: or Crédits Documentaires Créditos documentarios Crédito Documentário

Credits of the Subject “Methods of payment/Letters of Credit”: 4 ECTS.

1. Trade Facilitation Agreement
2. Trade Facilitation
3. Trade Facilitation Agreement
4. Kyoto Convention

Methods of payment/Letters of Credit.

The Letters of Credit are more favorable for exporters rather than to the importers, as they are aimed at protecting the exporter.

This is a short but crucial subject. The ability of the trade practitioner and their bankers to issue documentary credits, which are complete and precise, is essential.

This subject will familiarise the student with the role of the Issuing Bank, how to complete the documentary credit application form and the most importantly, how to analyze the credit as issued.

Sample - Example of the Subject - Methods of payment/Letters of Credit:

FIATA Transport Documents and Documentary Credits:

1. FIATA FBL: UCP 600, negotiable document, unless it is specified as “non-negotiable”
2. FIATA FWB: UCP 600, non-negotiable
3. eFBL Bill of Lading: legal equivalent to paper (FBL Bill of Lading)
4. FIATA FCR: allowed in a Letter of Credit, it is not accepted as a transport document, FCR is a non-negotiable document
5. FIATA FCT: FIATA FCT is admitted in a documentary credit, FCT is negotiable when it is specified that it is “to order of”
6. FIATA FWR: FWR is a non-negotiable document, unless it is expressly specified as negotiable (to order)

Documentary Collection

It is a method of payment whereby the exporter initiates, through the banking system, the collection of money due to him from the importer.

1. Payment will be made against a Bill of Exchange and title documents
2. Documents can be released against the acceptance of the Bill of Exchange or payment at sight

This subject will give the student a practical understanding of the Documentary Collections

The Uniform Rules for Collections (International Chamber of Commerce Publication), shall apply to all collections where such rules are incorporated into the text of the “collection instruction.”

In this subject we will provide a practical examples of the application of URC 522. All serious International Trade specialists should obtain a copy of this International Chamber of Commerce Publication.