Under normal circumstances, the applicant for a letter of credit can only get the documents if he pays in full. However, if the importer wants to obtain financing, he can also apply to the issuing bank for borrowing the documents with the trust receipt. Obviously, this financing has nothing to do with the beneficiary, and all risks are borne by the issuing bank.
① The buyer and seller sign a trade contract and agree in the trade contract to use a letter of credit as the payment method;
② The importer applies for a letter of credit, including submitting an application for a letter of credit to the issuing bank, paying a deposit for a letter of credit and providing a pledge;
③ The issuing bank accepts the applicant’s application and issues an irrevocable letter of credit as required on schedule;
④ After receiving the letter of credit, the notifying bank verifies the authenticity of the letter of credit and then notifies the beneficiary of the letter of credit in writing;
⑤ The exporter ships the goods according to the quality, quantity, packaging and delivery date specified in the letter of credit;
⑥ After the goods are shipped, the beneficiary prepares the required documents in accordance with the terms of the letter of credit and issues them on time. Submit documents to the designated notifying bank or negotiating bank within the specified time; ⑦ Designated negotiating bank examines documents and makes payment, acceptance or negotiation according to its own obligations; ⑧ Designated negotiating bank sends documents to the issuing bank for payment or sends documents to the issuing bank and claims reimbursement from the reimbursing bank; ⑨ The issuing bank pays the negotiating bank or reimbursing bank for the goods and performs its primary payment responsibility; ⑩ The issuing bank presents all documents to the applicant and notifies the applicant to examine the documents and pay to redeem the documents as required; The applicant pays and redeems the documents after examining them and obtains a full set of documents; When the goods arrive at the port of destination, the applicant presents the ocean bill of lading to the port and goes through the formalities for picking up the goods.