L/C (Letter of Credit) Operation Chart

L/C (Letter of Credit) Operation Chart

Muhammad Rahat
Dept. of Knitwear Manufacturing Technology
BGMEA University of Fashion & Technology (BUFT)
Email: smrahatsaif@gmail.com

L/C means Letter of Credit. It is one of the most used words in garment merchandising sector. L/C plays an important role both buyer and seller. Generally L/C is used for international sales transactions. L/C deals only in documents but not goods. An apparel merchandiser should have clear concept on LC. If you see the following picture carefully then you can learn how to operate L/C in apparel exporting business.
Operation chart of L/C
Fig: Operation chart of L/C
Explain of the the above image:
  1. Exporter ↔ Importer: Negotiation.
  2. Importer → Importer Bank: Import license, L/C
  3. Exporter: Commodity
  4. Importer Bank → Exporter Bank: L/C
  5. Exporter Bank → Exporter: L/C
  6. Exporter ↔ Trade department, inspection, custom, insurance. Shipper: License, Documents.
  7. Exporter: Shipping
  8. Exporter → Exporter Bank: Documents
  9. Exporter Bank → Exporter: Payment
  10. Exporter Bank → Importer Bank: Documents
  11. Importer Bank → Exporter Bank: Payment
  12. Importer Bank → Importer: Notification
  13. Importer → Importer Bank: Payment
  14. Importer Bank → Importer: Documents
  15. Importer → Customs: Claiming.

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Mazharul Islam Kiron is a textile consultant and researcher on online business promotion. He is working with one European textile machinery company as a country agent. He is also a contributor of Wikipedia.

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