Letter of Credit Basics: Parties to Letters of Credit

Letter of credit is a payment method in international trade. It is usually shortened as L/C or DLC. DLC means Documentary Letter of Credit or Documentary Credit. 

As of yesterday, I have started to write down a new series of articles regarding letters of credit. The 1st article was about the definition and types of letters of credit.  

Today, on this article, I will try to introduce you the parties to a simple letter of credit transaction. Each L/C party will be presented briefly and its role will be explained with the help of the graphic images. 

In a typical letter of credit transaction, one should expect to see following parties: applicant, beneficiary, issuing bank, confirming bank, nominated bank and reimbursing bank.

Parties to Letters of Credit

Let us start understanding these parties along with their roles and responsibilities one by one below.

Letter of Credit Basics: Definition and Types

Letter of credit is a payment method used in international trade transactions.

The letter of credit is distinguished itself from other payment methods in international trade by its complex structure and detailed rules.

Due to this complex structure, many international trade personnel have facing difficulties in letter of credit transactions.

Starting with today's post, I will be writing articles regarding different aspects of letters of credit. Hoping that my posts will be helping you out in your daily work.

The first article not only explains letter of credit definition but also defines letters of credit types.

Letter of Credit Definition | Letter of Credit Types

What is Import Customs Clearance?

When it comes to customs clearance, many people think of customs operations occur only at the importing stage.

But this widespread belief does not reflect the reality, because at least two different customs clearance have to be done in a single foreign trade transaction.

First customs clearance takes place at the exporting stage, which is called export customs clearance and second customs clearance takes place during the importing stage, which is also known as import customs clearance.

On my previous article, I have explained export customs clearance.

Today I want to make clarifications regarding import customs clearance operations.

import customs clearance definition | picture | image

What is Export Customs Clearance?

Each independent state has its own customs territory.

Every product, entering or leaving the customs territory of a specific country has to be subjected to customs procedures in accordance with the customs legislation of that country.

These procedures are also known as customs clearance.

If the customs clearance is carried out at the export stage, it is called export customs clearance.

Just on the other hand, if the customs clearance is carried out at the import stage, it is called import customs clearance.

Definition: Export customs clearance defines all the procedures and formalities that must be followed in order to export a particular good from an exporting country including but not limited to obtaining any export licence or other official authorization and carry out all customs formalities necessary for the export of the goods.

How to Complete a Bill of Lading and a Shipping Instructions? Step by Step Explanation with Examples

Bill of lading is a generic name of a transport document, which is used when goods are carried out via sea shipments.

Today's complex economic activities and modern transportation industry created a ground for the development of different types of bills of lading to be used in different situations.

Forwarder's bill of lading, charter party bill of lading, multimodal bill of lading, negotiable bill of lading, sea waybill etc. are some of the most frequently issued bills of lading types.

Regardless of what types of bill of lading you may face, you can be benefited from today's article, as I will try to explain how to complete a bill of lading in a very plain text with examples.