Letter of Credit
At ACI we have a variety of Letters of Credit to suit your needs:
Import or Domestic Letters of Credit - guarantee payment to a domestic or foreign supplier on behalf of the importer. Using this type of instrument transfers the financial obligation from the customer to the bank.
Export Letters of Credit - facilitate international trade for the exporter by offering them a high level of security by stating that they will be paid for their goods or services. This helps the exporter expand their business opportunities internationally while minimizing risk.
Standby Letters of Credit - issued on behalf of a customer to facilitate engagement in contracts with other individuals. ACI provides assurance that the customer will fulfill the terms of a contract with the beneficiary. A Standby Letter of Credit is also commonly used to support the credit worthiness of a customer.
In addition to our Letters of Credit we also offer Documentary Collections. At ACI, we provide exclusive service in conjunction with our banking institutional partners to act as an intermediary to collect payments in exchange for the transfer of documents that give title of possession of goods. This is an alternative to a Letter of Credit.
LETTER OF CREDIT
Below are the most common documents required in an Import or Export Letter of Credit and the definition of each document.
BILL OF LADING
A Bill of Lading is considered the most important document involved in a shipment of merchandise. An exporter receives a Bill of Lading when delivering the merchandise to the shipping company for transport to an importer.
ORDER BILL OF LADING
An Order Bill of Lading is a title document. Steamship companies issue one or more original Order Bills of Lading per shipment, which allows an importer to claim merchandise when it arrives. An exporter normally endorses the Bills of Lading "in blank," which means that they are not endorsed to a specific person or institution. The party possessing any one of the original Bills of Lading can take possession of the goods.
AIRWAY BILL OF LADING (STRAIGHT BILL OF LADING)
This instrument does not convey title. Airline companies issue Straight Bills of Lading called Airway Bills. Since an Airway Bill is issued only in non-negotiable form, an exporter consigns it to a specific person or institution. A copy of the Airway Bill accompanies a shipment, and an exporter is given the original to present along with other required shipping documents. To take possession of the merchandise, a party to which the merchandise is consigned needs to present proper identification. Therefore, if the air shipment is consigned to a buyer, the seller might lose control of the merchandise before payment is made. To help prevent this, an Airway Bill should be consigned to Zions Bank.
A Commercial Invoice is a document that describes merchandise, as stated in the Letter of Credit, and lists the costs. An importer may agree to pay, in addition to the cost of the merchandise, charges involved in shipping the merchandise. The description of the merchandise in the Commercial Invoice and the description of the merchandise in the Letter of Credit must be identical in every way.
Issued by an underwriting institution, the Insurance Policy states that a specified party will be reimbursed an amount in the event merchandise is damaged or destroyed. An Insurance Policy generally covers accidental losses and covers voluntary losses when a cargo must be sacrificed to save a ship. For additional cost, losses caused by spoilage, war, civil disturbance, riots and other risks can be included in the coverage. Because commercial banks are not included in the shipping business per se, questions regarding types of coverage should be referred to a freight forwarder or a customs broker.
Please note: There are other documents included in Letters of Credit and Documentary Collections not referenced above. Importers and exporters are encouraged to contact us to discuss a particular transaction and we will assist in determining if the documents will give rise to difficulties in negotiation of the documents.
Letter of Credit
International or domestic trade transactions
Fulfilling payment per contract agreement
Identifying delivery of goods and making the final payment
Typically four* weeks processing upon completing the Letter of Credit application
* Due to financial market volatility and COVID the processing time may exceed beyond four weeks.
Please get in touch with us to inquire about the fees associated with a Letter of Credit.
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