A letter of credit is a payment method in international trade. Import Letters of Credit are the most common method of import financing.
An Import Letter of Credit, which is also referred to as a 'documentary credit', is a financial instrument where the issuing bank, acting on behalf of the importer, contractually agrees to pay the beneficiary or exporter the amount stipulated, provided conditions specified in the Letter of Credit have been satisfied.
The biggest advantages of using an import letter of credit is,
- Fraud risk mitigation between the parties.
- It increases the importer’s creditworthiness.
- The terms and conditions under the import letter of credit cannot be amended unless all the parties agree, so it’s legally binding.
How Import LC created in RIVO
The RIVO registered users are allowed to initiate a new Import LC transaction request.
To start a new Import LC, go to the Home screen and click on the New [+] icon and select the Import LC option. Now click on Start and then navigate through all the screens giving the correct information. The required details are entered to complete the process of new Import LC issuance request.
Home -> Import LC -> Issuance
Note : According to SWIFT SR2023 changes, the fields "Shipment From", "Port/Airport of Departure", "Port/Airport of Destination" and "Shipment To" should be updated with the below-mentioned logic.
- Allow entering max 140 characters.
- support the SWIFT character set Z.
For the fields in RIVO "Shipment From", "Port/Airport of Departure", "Port/Airport of Destination" and "Shipment To", the data entered should be validated as per the SWIFT Z characters set mentioned above.
When data entered in the above-mentioned fields do not follow the rule of the Z characters set, RIVO should throw a warning message.
The warning message here shouldn't be a usual toast message. It should be similar to error messages displayed in RIVO. But the user should still be allowed to save and continue to the next card. RIVO shouldn't stop the user from proceeding with processing the deal.
WARNING message "The highlighted characters are supported by RIVO but might not be supported by the industry channel. Please consider rephrasing." should appear in orange and the characters which are not part of the SWIFT Z character set should be highlighted in red.
Also you can add Include "Contact Person" under Beneficiary details in Download Details template.
This is useful for the bank to key-in the contact details of beneficiary while processing it in Back office system. The updated templates are attached in this story.
To add a contact person please follow the steps below
- Create an Import LC
- Provide necessary information in the 'Tell us some basic details' card and proceed to the 'Beneficiary details' card.
- Enter the beneficiary's Name, Address, City, Country, and Contact Person.
- Ensure all mandatory fields in all other cards are completed, and then sign the issuance transaction.
- The status will be updated to 'Issuance - Approved.'
- Access the context menu options and select 'Download Details.'
- The downloaded document will display the contact person of the beneficiary.