How a Sight Letter of Credit works (Letter of Credit)

The workflow of a Sight Letter of Credit involves the Importer (Applicant), Issuing Bank, Advising Bank and Exporter (Beneficiary) in diagrams and animation.
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Under the method of payment of Documentary Credit also known as Letter of Credit - we have 2 types which is Sight and Usance. This video specifically looks at How a Sight Letter of Credit works in International Trade.
This video is a step by step workflow of what happens after the Exporter and Importer have entered into a sales contract & the Importer applies for a Letter of Credit with the Issuing Bank. This video also addresses the definition of a Letter of Credit.
Letter of Credit (LC) is an undertaking of payment given by the Importer's Bank to the Exporter for a specified sum provided the Exporter ships out the goods and present the required compliant documents by a predetermined deadline. Hence LC is a tool used to reduce the risk of non-payment and is a fundamental component of international trade. LC is governed by a set of guidelines called the Uniform Customs and Practice for Documentary Credits (UCP 600), which is issued by the International Chamber of Commerce.
What is important to note about Letter of Credit is strict compliance with documentary requirements. In the video, you will note that the Exporter needs to check the LC with the sales contract to see if the terms both documents match. As well as the Advising Bank (Nominated Bank) & Issuing Bank have to check the documents forwarded by the Exporter that it complies with the LC.
This video is designed to provide those operating within International Trade: Exporters, Importers, Bankers & Insurers, Freight forwarders and Carriers an opportunity to broaden their understanding of Sight Letter of Credit in International Trade.
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This video was produced by
1. Mr. Billy Fong Goon Poy, ACIB, MITD, Master Trainer
2. Ms Sook Ling, Online Content Creator
Tradelinks Resources conducts public training programs for the following International Trade courses in Malaysia
1. Incoterms 2010
2. Letters of Credit
3. Bills of Lading - Correct Preparation To Avoid Rejection by Banks

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[@anniekimchi7469]

Hi wheee can I find the clip of LC usance , can u share me the link

[@theguest2172]

you deserve 7 stars.
nice lesson and pretty explanation.
thank you very much.

[@rashiffrashiff1590]

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[@christiansoglo7051]

Thanks a lot for this very informative video. I like that you explained everything in detail!

[@user-yo7xb8jt7z]

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[@gcinizyan]

explained PERFECTLY, thanks a lot for this

[@a1da1]

I like the videos especially how you make sure we understand you clearly and your words.

[@fashinakamorubode7669]

I am exceedingly glad to view and listen with rapt attention and understanding of your presentation on the method of payments for import and export trade.

[@nifinnayakam674]

Good to Hear and easily understood..
Thank You

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[@haroldndundu4000]

Great lecturer, commenting from zambia.

[@rosmidahsaidi3580]

Great lecture n precise explanation

since i discover this channel, i left movies behind to watch these

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[@Manucpaul]

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[@lindasaragihlinsar2115]

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[@user-yo7xb8jt7z]

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[@007venturecapital]

2:44 - 'Predetermined Deadline' (Sight Bill) or in the determinable future (Term Bill).

[@dongminjin5074]

A wonderful training video. Much easier than a traditional training book.

[@TradelinksResources]

thanks for your comment

[@swapanmaity3717]

Your presentation regarding LC procedure is very simple and above all easy to understand. Request you to prepare more videos on types of LC.

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[@ahubtrading9801]

I like how your videos are presented_short and straight to the point. easy to follow and understand for us who are just being to learn about international trade

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[@birchikomengis5679]

Clear and understandable presentation.

[@venkatyadav5929]

Very good information sharing this.. simple and quick learning.. thank you very much

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[@abhilashlakkidi]

So simple and vivid explanation.
Big Salute 👍

[@nirmaxmulticom8796]

Good explanation easy to understand in simple terms ! certainly useful and applicable to peopel in trade ! Thanks

[@richardadamwais9734]

thanks your explication it was accurate as exporter and importer both of don't encounter any risk for their transaction that's why letters of credit has less risk than others

[@dilankaruwanthi8532]

Thank you so much. It is easy to understand and this channel is very useful for us to improve knowledge on international trade. I'm following international trade diploma.This channel give me lot of support. Please do new videos more. Once again thanks lot...

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thanks for your comment

[@selmacam8075]

You make it very simple. Thank you.

[@mohammedtarek8258]

thanks , this is professional video

[@ahmedbagazi5240]

I have a test this was so useful thanks

[@lokkaashdhoni8665]

Super presentation ❤❤❤

[@khalilultimate]

Presentation is very good. Thnx from Bangladesh

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thanks for your comment

[@pujamall1757]

Great efforts love from India❤

[@sikanderhayat448]

Great effort, appreciate

[@mokacciounoo]

Thank you for sharing your knowledge with us..

[@fahmiimran]

Thanks for your explanation

[@shanellemooka8267]

Best explaination ever

[@TradelinksResources]

thanks

[@ourfamily9397]

Thank you for sharing and efforts .

[@sarojkandel1498]

One thing I wonder, should the applicant deposit the payment in the issuing bank's account before issuing the LC ?? I mean, does the importer deposit the money in advance or it deposits the the payment after the whole mechanism takes place??

[@SaidKaireh-cb3gk]

I like really it's very important for me thanks...

[@KathyLu-bi2xg]

very helpful

[@Bala-en5vb]

Great information...please contribute more videos .....I recently joined a course in "advanced certificate in International Trade" in Mumbai, India & your videos really help me to relate to what was though in my class + your graphics r great.... really appreciate your efforts in creating this videos

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[@alexnjsikoko]

Nice job guys, very good explanation

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[@user-of7lv7nw1f]

great video! appreciate it

[@leonardo-fp7on]

Very good 👍

[@geletugg2888]

Thank you
Very clear.

[@relaxationzen9463]

thank you very much that was very informative and easy to understand keep up the good work and plz post more about international trade

[@TradelinksResources]

thanks !

[@musabatuta2886]

@@TradelinksResources nice video. How can I get a detailed lecture on export /import?

[@genetbirku2057]

VERY GOOD VIDEO (EXCUSE FOR MY GRAMER ERORR)

[@bumblebeemelodies2739]

I have tried many videos. yours was the best. exellent
keep it up. pls do one on the types of LCs pls.

[@TradelinksResources]

thanks for your comments - noted

[@RaviSaini-ti5ez]

Please make a video on Usance Sales Contract , How can we make this contract.

[@mohammadaftab893]

Thanks a lot...Very useful

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[@raghuram2578]

Good video which cleared my doubts

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[@christianmutatsh6018]

Good explanation

[@hanyborsali7828]

so proffisional

[@gurjantsingh-vi2de]

Nice explanation.well done

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[@nareshcontractor549]

Good one, Good video

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[@Saravananganapathy5]

Thanku so much mam for your great explanation and so your hardwork effort is super mam pls kindly post the video for usance letter of credit

[@rauldado4466]

Excellent!!

[@shaan8032]

Thank You

[@mohammadshahabuddin1480]

Thank you very muchh....so easy to understand....good hardwork

[@TradelinksResources]

thanks for your kind words

[@meassavuth4649]

how to do if the exporter sent wrong products or broken product to the importer ???

[@senoltemur2420]

Thanks a lot

[@saifulislam-rj8zy]

Thanks, from 🇧🇩

[@TradelinksResources]

thanks for your comment

[@adiksenpoui7079]

Thanks you for the all info..very nice for explaining. ...I more understand..thank

[@TradelinksResources]

thanks !

[@meliscolak2674]

Thank you so much!!!!!

[@TradelinksResources]

thanks

[@SenaDiwakara]

❤ Please explain confirmed LC process

[@camaheshks3018]

Great. easy to understand

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[@Clarksportstv]

Thank you for this wonderful video for newbie for trading like me give me a lot of learning 🙏

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[@asmaashabaka8339]

wonderful

[@queenandaya7279]

Thank you so much for this!!

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[@makcimenuka7904]

Thank u very good explanation.

[@carolinerutendochibanda7896]

Amazing

[@beehiveeducation5300]

Thanks

[@Suhailes]

Very informative 👍🏼

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[@bottaanilkumar5358]

Good and thank you

[@TradelinksResources]

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[@vaibhavlodha1178]

Very Good Job... THANKS.... JUST NEED USANCE LC OPERATION... WAITING

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[@GCCCoLLC]

Nice.Well done.

[@TradelinksResources]

thanks

[@nambuyacathy9036]

What happens if the importer fails to pay the issuing bank? Great presentation though

[@cool1u1]

Brilliant !!!

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thanks

[@santhoshkumary5569]

I Really appreciating you. Super

[@TradelinksResources]

thanks for your comment

[@Jess-is1lv]

If the payee is a trust is it recommended that the drawee be the organization or the name of the ceo?

[@yawarmujtaba8840]

Good way to earn knowledge

[@TradelinksResources]

thanks for your comment

[@ibrahimmwinyi2976]

Thanks a lot it is very useful lecture, so is lc applicable to Cif contracts only?

[@rebeccakumi5369]

I would definitely fail my course if it weren't for these videos.

[@mahmoudalshami1557]

Do you have training video about SCLC?

[@modidoar]

useful video

[@TradelinksResources]

thanks for your comment

[@924waqas]

great video

[@TradelinksResources]

thanks for your comment

[@2edDev]

What are the banks turnaround times on each process... I.e, how long do they usually take to approve the LC and how long do they take to send docs to the issuing bank.
Is there anyway that we can communicate directly?

[@anilkhambal848]

very helpful....

[@TradelinksResources]

thanks for your comment

[@rosmidahsaidi3580]

Hi where is can see usance LC explanation

[@paintedbird6791]

Great video, Thanks
I am an active seller of goods, manufacturer.
We no longer use letter of Credit. It is a complete waste of time for well educated employees.
Nomi banks are complete A-holes and charge you for mistakes.
Many times you have to issue a Original B/L.
Only 3rd world countries that has no trust in their own system would use such wasteful way of transacting payment.
These days, if you are well known and have a good reputation. You can ask for 50% at order, balance against documents.
And use seaway bill.

[@TradelinksResources]

thanks for your comment

[@user-gv8iv1mc6n]

useful

[@asmaabdurasak1052]

thank youuuuuuuuuu

[@TradelinksResources]

Thanks for your comments

[@abd-tg9vl]

Good

[@TradelinksResources]

thanks for your comment

[@megaportcustomsbrokerage8871]

how about the usance?

[@rajusharma709]

Can you tell us how can we find buyer in international market because there are many froudr in the market

[@mariajosenavin1793]

Is advising bank also termed as negotiating bank ?

[@ashleyperera9604]

great

[@TradelinksResources]

thanks for your comment

[@Jessicanguyen89]

thank u

[@TradelinksResources]

thanks !

[@manojkumarsekar]

Can you please share the video about how an Usance Letter of Credit works

[@TradelinksResources]

thanks for your comment! i'll add that topic to my list of videos to produce

[@janepanelo8842]

Do you have a usuance LC works?

[@sudhirpwc]

Can you send presentation

[@newalpha5592]

What is cover letter?

[@DaMi0421]

Hello,
I have client. My client insists LC At sight means at LC released after goods arrived at destination port. While me I insist LC at sight means Lc release after seller bank surrendered all the shipping docs to Buyers bank. Can you give me some advise? Thanks, Michale

[@samfcarvalho]

Yeah, avoid this kind of client, it's a old trick where when the product arrives at the port, they claim there is a problem with the product and they demand a huge discount, and if you don't pay, the product is stuck there without a buyer. My advice is tell them politely that you're afraid of the potential risk and they can meet you half way or you'll take your business somewhere else, to which they'll probably give up because they might have been trying to cheat you the entire time