NavigateERP for African business

Raise and open a letter of credit

From the application to the bank’s LC number.

Steps

  1. Treasury → Letters of credit → New LC: the supplier (beneficiary), the issuing bank, the kind (at sight, usance, deferred, standby), the currency and amount with any ± tolerance, the margin %, the dates (latest shipment, expiry, days to present), shipment terms, the purchase order and import it pays for, and the documents the LC calls for (originals and copies).
  2. Send for approval - someone other than the person who raised it approves (or sends it back).
  3. Print the application for the bank. When the bank opens it, Record the opening: the bank’s LC number and date, the account - the margin is taken from it, with the opening commission and SWIFT charges.

Good to know

  • The issuing bank is a lender in Treasury → Loans → Lenders & borrowers - a settlement converted into a loan is a loan from that bank.
  • Margin: Dr LC margin deposits / Cr bank. Charges: Dr Letter of credit charges / Cr bank.