Letters of Credit
Bank of China - New York can handle your trade service needs quickly and efficiently, utilizing the worldwide network of Bank of China and our correspondent banks.
If you are importers or purchasers
We can offer you the issuance of all types of letters of credit, shipping guarantees, air-release guarantees, process inward documentary bills, and perform inward documentary collections and trust receipt refinancing.
If you are exporters or vendors
We can provide advising and confirming letters of credit coming from your buyers, collect payments in an efficient manner under letters of credit, process outward documentary bills and perform outward documentary collections.
If you are middlemen
We can address your business needs with its transferable letters of credit, assignment of proceeds, back-to-back letters of credit and back-to-back collections.
Import Letter of Credit
WHAT—What is Import Letter of Credit?
· Letter of credit is an undertaking of a bank for account of the importer to pay the foreign exporter the value of the goods provided the required documents are submitted and the terms of the credit are complied with.
· Innless scope ----1. Issuing different types of L/Cs such as: Sight Payment Credits, Deferred Payment Credits, Acceptance Credits, Negotiation Credits, Transferable Credits, Confirmed Credits, Revolving Credits, Reciprocal Credits. 2. Provide such transactions as issue L/C, amend L/C, receive and examine documents, make payment, acceptance or dishonor, assist the importer in investigate the exporter's credit status, preparation of goods and liner inquiry.
WHY—Why to choose Import Letter of Credit?
· Improve negotiating status - issuing of L/C means that importer provides the exporter with conditional payment commitment of the bank in addition to commercial credit. It improves credit and negotiating status of the importer, so may be able to negotiate for a lower purchase price and better terms;
· Ensure goods - ensure that the goods supplied are the goods ordered.
· Reduce occupied capital - if issuing a L/C outward upon given credit, importer needn't spend self-owned capital in stages of opening L/C in the opening bank, exporter's preparation of goods, and delivery；
WHEN—When to use Import Letter of Credit?
· Bank's guarantee is needed to provide a sense of comfort to the importer and the exporter in the trade transaction with payments made upon receipt of the right set of documents including the title of goods;
· The imported commodities are in the seller's market, and the exporter insists on payment on L/C;
· Current capital is not sufficient and the importer intends to make use of convenience of trade finance.
HOW—How to handle Import Letter of Credit operation?
· The Operation flow
· Points for Attention：
1. The followings should be surrendered when issuing a L/C: application form; the contract; import permit (e.g., import registration form of mechanical and electrical products, etc.); various files as per the foreign exchange control regulation (e.g., application form of purchase exchange, the verification certificate of import payment in foreign exchange, record form of import exchange payment, etc.).
2. The followings should also be surrendered when issuing a L/C for the first time: the business license of enterprises; import agency agreement (if needed); other certificates (if needed).
3. When issuing an import L/C, the importer provide the exporter with extra guarantee on payment in cost of more bank charge born by it, so the importer had better ask exporter for preferential prices during the commercial negotiation concerning this point.
ADVANTAGES—Advantages of Bank of China
· Predominant credit —— BOC has a long history of over 90 years and has been awarded “the Best Bank in China” by “Euro money” for successively 8 times. With the progressively improved system of corporate governance, overall integration of operation flow, wholly-upgraded service efficiency and rich financial products, BOC has continued to advance toward its goal of becoming a leading universal international bank;
· Powerful Credit Improvement —— The L/C opened by Bank of China is widely acceptable by exporters in various countries, able to improve the credit and negotiation status of the importer to win favorable contract terms;
· Leading technology —— A large number of professional personnel who are proficient in letter of credit business, UCP500, and relevant laws, whose technical and professional level of document checking up and dispute handling is the first class in banking sector;
· Positive accreditation policy —— The earliest commercial bank to implement unified accredit in China, which is gradually perfecting, efficiently simplifying the formalities of giving credit in opening a L/C;
· Abundant service content —— Provide various importers with direct consultation service including credit status of the exporter, the risks in the exporter's country, the trend of the products in the international market, selecting exporter's bank, quality of terms on the L/C and documents, foreign exchange control, financing policy etc.;
· Efficient risk-evading system —— Sole bank dealing with forward bills sales business to help clients evade exchange risks of time L/C.
· Clear liquidation channel —— Liquidation channels of major currencies include New York Branch - US dollar liquidation center; Bank of China (Hong Kong) - Hong Kong dollar liquidation center; Frankfurt Branch - Euro liquidation center; Tokyo Branch - Japanese yen liquidation center;
· Advanced technology level —— Took the lead to participated SWIFT in 1993, processes sophisticated SWIFT system and is capable of handling convenient and quick incoming export documents business for the clients;
· Global network —— 560 institutions scattered in Hong Kong, Macao and oversea areas, nearly 4000 agency banks, and a multi-nation and multi-layer high-speed universal payment network established through 90 years accumulation;
Export Letter of Credit
-Export settlement tool with lower risks
WHAT—— What is Export Letter of Credit?
· A series of service provided to the exporter by the bank in exporter's country after it received L/C from issuing bank, including advising L/C, taking up and examining documents, presentation, reimbursement etc.
· The contents of export L/C include checking up the authenticity of export L/C and amendment of L/C, advising the domestic exporter; transfer L/C, examining transport documents surrendered by the exporter and presentation of documents; deal with trade financing such as negotiating, bill purchase, discounting on the request of clients; forward-sold of exchange in RMB; inquiry, urging, recourse short payment and interest, by-sending documents; check the credit of importer.
WHY——Why to choose Export Letter of Credit?
· Lower risks - bank credit of the issuing bank replaces commercial credit of the importer, the issuing bank provides undertaking of conditional payment to exporter;
· High initiative - exporter will obtain the undertaking of unconditional payment from the issuing bank as long as the exporter can guarantee the quality of documents which is completely under control of the exporter;
· Fee transfer - banking charges such as opening L/C etc. are usually for the importer's account.
WHEN——When to choose Export Letter of Credit?
· The exporter has no awareness of or confidence in the credit status of the importer and needs additional undertaking from the importer's bank;
· Needs to apply to the local bank for packing loans, so as to finance preparing for the goods to be exported.
HOW——How to handle Export Letter of Credit operation?
· The Operation flow
· Points for Attention：
1 When discussing business terms with importer, “soft clauses” L/C should be avoided. At the same time a safe and convenient way of reimbursement should be confirmed to guarantee a safe collection of payment;
2 Before the negotiating bank examines documents, the exporter needs to present: a. full set of documents stipulated in L/C; b. Origin of L/C;
3 If insisting on sending documents with discrepancies, it is difficult to handle trade financing;
4 The bank will deal with operations such as collection of payment, settlement of payment, credit account according to the state regulations concerning foreign exchange control;
5 If exporter wants to withdraw L/C, he needs to present: a. trust instrument in written form; b. full set of original L/C.
ADVANTAGES——the advantages of Bank of China
· Predominant reputation —— BOC has a long history of over 90 years and has been awarded “the Best Bank in China” by “Euromoney” for successively 8 times. With the progressively improved system of corporate governance, overall integration of operation flow, wholly-upgraded service efficiency and rich financial products, BOC has continued to advance toward its goal of becoming a leading universal international bank;
· Client first —— To provide clients with the most efficient service in shortest period is our continuous aim;
· First-class professional service —— BOC, as the first bank in china to provide international settlement business, has absorbed a pool of talented experts. The bank has maintained the largest share of the domestic market and has always been the best against its Chinese peers in this regard;
· Overall services —— Provide direct investigation or consulting service including credit status of the importer and issuing bank, the risks of the import country, the going trend of the products in the international market, terms of L/C, quality of documents, foreign exchange control, financing policy etc;
· Effectively risk-evading system —— The first bank in china to offer Renminbi forward purchases and sales for foreign exchange, BOC accumulated rich experiences in helping the clients to dissolve overall exchange risks.
· Safe and timely clearing business —— With four major clearing center, that is US dollar clearing center- New York Branch; Hong Kong dollar clearing center- Bank of China (Hong Kong); Euro clearing center -Frankfurt Branch and Japanese yen clearing center-Tokyo Branch, BOC stands as the leader in domestic market for foreign currency clearing businesses;
· Advanced technology level —— BOC became one of the first bank to participate SWIFT in 1993. Sophisticated SWIFT system provides our clients with robust guaranty of convenient and high-speed collection service.
· Global network —— With 12529 domestic branches, 560institutions scattered in Hong Kong, Macao and oversea areas and nearly 4000 agency banks, BOC, exclusively in domestic market, has established a multi-nation and multi-layer high-speed global payment network established through 90 years accumulation