Letters of Credit

1
Letters of Credit

• Getting Paid Under
• An Irrevocable Documentary Credit

Karen Dunlap Dunlap International, Inc.
2
Letter of Credit
Governed by UCP 500
Summary of a contract between seller and buyer
with the bank(s) as referee.
3
The Beginning An Offer and an Acceptance

• Formal Contract
• Sellers Quotation/ Proforma Invoice and Buyers
  Purchase Order
• Order placed over the internet

4
PROFORMA INVOICE Critical First Step

• A PROFORMA INVOICE is an invoice provided by a
  supplier prior to the shipment of merchandise,
  informing the buyer of the kinds and quantities
  of goods to be sent, their value, and important
  specifications (payment terms, time of shipment,
  weights and dimensions, shipping terms, etc.).
• Essentially the proforma invoice is a quotation
  laid out in the format of your proposed billing
  invoice summarizing the key terms of your sales
  contract .

5
When is a Proforma Invoice required?

• 1. To enable the Buyer to open a Letter of
  Credit.
• 2.To enable the Buyer to obtain an Import License
  (and foreign currency exchange).
• A Proforma is useful anytime you need to
  communicate your expectations clearly!