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© Copyright 2006 | ITRADEV.NET

Documentary Credit Life Cycle

If I ship goods, will you pay?

Documentary Credits like a “Letter of Credit” or “L/C” is the most preferred form of payment for goods in international trade as it solves issues of mutual mistrust by using banks as arbiters.

ExporterImporter

If I pay, will you ship the goods?

CONTRACT OF SALE | the current way1

Ok, I’ll ask my bank to open a

L/C

Great!

Akshay Samant

Asad Shah



DISCUSS TERMS OF SALE | the usual way2

Great!

Importers and Exporters figure out the terms of the LC through phone calls, faxes, emails and various other channels of communication. Also various departments from both sides may communicate with their counterparts during the process and further complicate matters.



The longer it takes the more confusing it gets!



IMPORTER APPLIES FOR LC | the usual way3

I’d like to open an L/C.

Can you help me with the application?

You know that Banks do not deal in the merchandise that the LC covers.

Banks only deal in documents

Yeah Yeah

Payment will only be made if all terms and conditions are met and there are

NO discrepancies!That’s the Exporter’s

headache not mine!

Traditional Documentary Credits are opened through Banks, creating a disconnection with the underlying order. This results in frequent Documentary Credit amendments that increase costs, discrepancies and turnaround time.



LC ISSUED TO EXPORTER | the usual way4

Exporter gets the goods ready for shipment and prepares the documents required by the LC



DOCUMENTATION ISSUES | the usual way5

oopS

BIG oops

Can I request for

amendments and delay

the shipment??

THE L/C SAYS WHAT IT MEANS & MEANS WHAT IT SAYS

Goods description is not as per L/C

B/L not endorsed

Insurance coverage not sufficient

Tenor is incorrect

Freight payment not as per LC

Port is incorrect

Description not consistent

B/L notify party incorrect

DID YOU NOT COLLABORATE PROPERLY??

statistics prove that 60% to 80% of the documents presented to banks do not comply with the L/C and contain errors thereby delaying payments or refusal by

the negotiating bank altogether



THE NEED FOR AMMENDMENTS| the usual way6

Amendments?Delayed shipment!

=Lost customers!

I wish I had made it my headache!

I wish there was a structured way to

collaborate BEFORE involving banks



There is a better way!

Its called the TradeDoX Documentary Collaboration Module



CONTRACT OF SALE | the TradeDoX360 way1

Awesome!

Documentary Credits like a “Letter of Credit” or “L/C” is the most preferred form of payment for goods in international trade as it solves issues of mutual mistrust by using banks as arbiters.

Exporter

Importer

I’ll open an LCLets collaborate on the terms through

TradeDoXBefore I go to the

bank

1



The Documentary Credit Collaboration module re-engineers the process of applying for a documentary credit. The Importer and vendor collaborate on the terms of the Documentary Credit, ensuring that the details are agreed before the Importer requests payment guarantees from its Bank

COLLABORATE | the TradeDoX360 way2



In-line negotiation facilities that allow both parties to confirm, reject and request amendments to credit details before involving Bank partners




Direct linkage to the underlying order to ensure consistency




TradeDoX’s “collaboration module” creates a “common ground”

• It incorporates bilateral viewpoints, to deliver a shared, common understanding of the terms of the LC




IMPORTER APPLIES FOR LC | the TradeDoX360 way3

Here’s the LC application

already to go. And here’s the

electronic SWIFT code file that you can use to open

the LC. All thanks to TradeDoX!

Wow! I wish all my other clients were like this.

I think I’ll give all my clients a

free copy of TradeDoX. Better then giving em t-shirts

and pens!



LC ISSUED TO EXPORTER | the TradeDoX way4

Here are the docs exactly as

per the LC.NO

DISCRAPANCIES!All thanks to TradeDoX!

TradeDoX makes the documents directly from the collaboration

Exporter ships goods and presents the documents to the bank.

Wow! I wish all my other clients were like this.

I think I’ll give all my clients a free copy of TradeDoX. Better then giving em pens and

t-shirts!



TradeDoX’s- Benefits for Exporters•Enables Exporters to get paid quickly by delivering trade finance documents that are conformant with the bank's terms •Accelerates advice of LCs and amendments and virtually eliminates discrepancies.•Major benefits of TradeDoX 360 include:•Reduces Errors - Minimizes costly data entry errors and discrepancies that can delay payments. (Single data entry for consistency in documents)•Accuracy – Save templates to reuse data on consignees, trading partners, product line items, Schedule B coding, etc. Collaborate Electronically - you can email the documents directly to your freight forwarders, customs brokers or customers so they can start the clearance process a lot faster. •Saves Time - Using the TradeDoX 360 document generation engine, the program automatically populates data on the documents you select, speeding up your document preparation process by as much as 90%.•Save Money - Avoids expense and alignment problems of preprinted forms, especially stocking many variations of export forms as documents can be printed together with your logo on any paper from any printer or you can print them on your existing letterheads.•Easy-to-Use - Wizard based interface. Enter and edit complete, detailed information about individual shipments and LCs You can duplicate similar shipments and save them as templates to decrease data entry and store a master list of products and shipping entities to ensure quick and exact entry.•Faster processing - Avoid the usual mail and courier pick-up delays: Send shipping documents to your partners and logistics service providers with a few simple mouse clicks.



TradeDoX’s- Benefits for Importers

•TradeDoX’s Documentary Credit Collaboration module re-engineers the process of applying for a documentary credit. It enables the Importer to collaborate with the exporter on the terms of the Documentary Credit, ensuring that the details are agreed before the Importer opens the LC through its Bank.

•Allows the Importer to collaborate in a structured way based on the exact Codes used by banks to open a LC.

•Generates the LC application AND the SWIFT file that the bank can use to open the LC with the exact terms that the importer and exporter have agreed upon.•Virtually eliminates the need for amendments and allows exporter to ship goods a lot faster.



TradeDoX’s- Benefits for Banks

•Minimize personnel and staff cost that was needed to check client’s documents for discrepancies and errors.

•Receive clear cut LC applications with all terms and conditions spelled out.

•Receive an electronic file that can be imported directly into the SWIFT application to generate the LC.

•Facilitate customers – generate goodwill.



TradeDoX’s- Benefits for Freight Forwarders

In today’s ever-changing commercial world, conventional means of business communication are not only time consuming; but also hindering to an organization’s competitiveness. The electronic transmission of documents therefore is increasingly necessary for efficient cross-border trade.

TradeDoX allows Freight Forwarders to receive, send and share shipping documents electronically to speed up the shipment process.

•Simplified trade processes •Reduced paperwork •Faster response time •Cost and time savings •Increased reliability of data

Td presentation

Business

tradedox way

collaboration lc

lc great

lc application

tradedox360 way

lc port

usual way

better way