We all have heard that the stable development of the economic system is primarily characterized by a stable banking sector.That is why the government of many countries with developed market economies strongly contribute to the development of the banking system of the country.That's why all of the registered legal entities engaged in some form of economic activity, are required to have a current bank account for settlements with organizations, enterprises, private entrepreneurs, financial institutions, budget and extrabudgetary funds.Hence the popularity of non-cash payments through the bank, among which the letter of credit payment.
world practice of banking and local laws of most countries, including the Russian Federation, are the following forms of documents to settlement:
- calculations under the Credit;
- collection orders;
- bills;
- checks;
- payment orders.
simplest and most familiar form of payments for many businesses and companies is the most common payment order.It is this method most often used in carrying out activities in the territory of one state.However, if you start working with foreign clients, this form is no longer large enough, and comes to mind Letter of credit.
When entering foreign markets such as the criterion of simplicity is already less attractive in comparison with the legal certainty and financial security.Although the foreign trade transactions (export-import) are widely used as the settlement of letters of credit and collections, best meets these criteria is still a letter of credit.This calculation is also popular, and the fact that the reliability of foreign firms prefer to work under the terms of the letter of credit payment.
Nevertheless, many entities do not dare to such a form of payment, considering it quite complicated and expensive.However, to protect against the risks always have to pay, but for the benefits offered by Letter of credit, such as the 100% payment for the goods sold and a 100% compliance with all terms and conditions of the contract by both parties, it should be explored.
Letter - a form of cashless payment, which is fully carried out under the supervision of banks as follows:
- to sign a contract, the seller prior to shipment of goods requires the buyer to open a letter of credit in his name.Buyer fulfills this requirement through your bank.
- Banks cooperating buyer opens a letter of credit (bank account in another bank, usually in the bank, which is served by the seller) and translates the amount of the seller, but not on the current account, and credit.This money is not available to the seller, until you get the goods.
- bank opens a letter of credit.This was notified to the seller.Only after he was convinced that by a L / C payment is transferred to the account, the goods are delivered to the buyer, and supporting documents are sent to the bank, which cooperates with the seller.
- The bank sends the documents to the buyer's bank to verify that they comply with the terms of the letter of credit.
- on current account of the seller lists the means for the goods sold, the buyer sends the document to the goods.Only after that he has a possibility to get the goods and dispose of them.
Letter of credit suits both the seller (the bank gets paid for the goods in advance, prior to delivery) and the buyer (the money is transferred only in full compliance with the contract).
Letter of credit is carried out according to the rules, among which the most important are noted, such as the mandatory details and deadlines.These and other terms of the submission of letter of credit documents are always defined and regulated by the National Bank of state.In Russia, these rules can be found, to study the situation of non-cash transactions.
