How Does a Negotiable Letter of Credit Work?
What Does Negotiation Mean? Negotiation means the purchase by the nominated bank of drafts (drawn on a bank other than the nominated bank) and/or documents under a complying presentation, by advancing or agreeing to advance funds to the beneficiary on or before the banking day on which reimbursement is due to the nominated bank. What Are the Benefits of a Negotiable Letter of Credit to the Exporters? Exporters can reach the payment sooner with negotiable letters of credit, while offering usance terms to the importers. With the help of the negotiable letters of credit, exporters can balance their cash flows, and able to propose competitive payments terms to the importers. Who Should Pay Negotiation Fees? Negotiation fees generally covered by the exporters, although this is contrary to the letter of credit rules. How to Understand if a Letter of Credit Negotiable or Not? In order to understand if a letter of credit is negotiable or not, you need to look at field “ 41A-A...