How a Sight Letter of Credit works (Letter of Credit)

The workflow of a Sight Letter of Credit involves the Importer (Applicant), Issuing Bank, Advising Bank and Exporter (Beneficiary) in diagrams and animation.

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Under the method of payment of Documentary Credit also known as Letter of Credit – we have 2 types which is Sight and Usance. This video specifically looks at How a Sight Letter of Credit works in International Trade.

This video is a step by step workflow of what happens after the Exporter and Importer have entered into a sales contract & the Importer applies for a Letter of Credit with the Issuing Bank. This video also addresses the definition of a Letter of Credit.

Letter of Credit (LC) is an undertaking of payment given by the Importer's Bank to the Exporter for a specified sum provided the Exporter ships out the goods and present the required compliant documents by a predetermined deadline. Hence LC is a tool used to reduce the risk of non-payment and is a fundamental component of international trade. LC is governed by a set of guidelines called the Uniform Customs and Practice for Documentary Credits (UCP 600), which is issued by the International Chamber of Commerce.

What is important to note about Letter of Credit is strict compliance with documentary requirements. In the video, you will note that the Exporter needs to check the LC with the sales contract to see if the terms both documents match. As well as the Advising Bank (Nominated Bank) & Issuing Bank have to check the documents forwarded by the Exporter that it complies with the LC.

This video is designed to provide those operating within International Trade: Exporters, Importers, Bankers & Insurers, Freight forwarders and Carriers an opportunity to broaden their understanding of Sight Letter of Credit in International Trade.
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This video was produced by
1. Mr. Billy Fong Goon Poy, ACIB, MITD, Master Trainer
2. Ms Sook Ling, Online Content Creator

Tradelinks Resources conducts public training programs for the following International Trade courses in Malaysia
1. Incoterms 2010
2. Letters of Credit
3. Bills of Lading - Correct Preparation To Avoid Rejection by Banks

[TradelinksResources]

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[이탈-yb]

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[theguest]

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[jayanthawijayasinghe]

Very good explanation. Helped me to understand the process😊

[이탈-yb]

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[ada]

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[fashinakamorubode]

I am exceedingly glad to view and listen with rapt attention and understanding of your presentation on the method of payments for import and export trade.

[meassavuth]

how to do if the exporter sent wrong products or broken product to the importer ???

[lindasaragihlinsar]

Your explanations are very clear and easy to understand ❤

[gcinizyan]

explained PERFECTLY, thanks a lot for this

[christiansoglo]

Thanks a lot for this very informative video. I like that you explained everything in detail!

[birchikomengis]

Clear and understandable presentation.

[haroldndundu]

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[wavyavy]

2:44 - 'Predetermined Deadline' (Sight Bill) or in the determinable future (Term Bill).

[dongminjin]

A wonderful training video. Much easier than a traditional training book.

[abhilashlakkidi]

So simple and vivid explanation.
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[nifinnayakam]

Good to Hear and easily understood..

Thank You

[swapanmaity]

Your presentation regarding LC procedure is very simple and above all easy to understand. Request you to prepare more videos on types of LC.