Documentary Credit Life Cycle

1
CONTRACT OF SALE |
If I pay, will you ship the goods?

the current way

If I ship goods, will you pay?

Importer

Exporter

Ok, Ill ask my bank to open a L/C

Great!

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.

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Documentary Credit Life Cycle

2
DISCUSS TERMS OF SALE | the usual way

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.

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Documentary Credit Life Cycle

The longer it takes the more confusing it gets!

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Documentary Credit Life Cycle

3
IMPORTER APPLIES FOR LC | the usual way

Id 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!

Thats the Exporters 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.

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Documentary Credit Life Cycle

4
LC ISSUED TO EXPORTER | the usual way

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

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Documentary Credit Life Cycle

5
DOCUMENTATION ISSUES |
oopS B/L notify party incorrect Goods description is not as per L/C

the usual way

Tenor is incorrect

Description not consistent

BIG oops

B/L not endorsed

Can I request for amendments and delay the shipment??

Insurance coverage not sufficient

Port is incorrect

Freight payment not as per LC 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 L/C SAYS WHAT IT MEANS & MEANS WHAT IT SAYS

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DID YOU NOT COLLABORATE PROPERLY??

Documentary Credit Life Cycle

6
THE NEED FOR AMMENDMENTS| the usual way

Amendments? Delayed shipment! = Lost customers!

I wish there was a structured way to collaborate BEFORE involving banks

I wish I had made it my headache!

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Documentary Credit Life Cycle

There is a better way!

Its called the TradeDoX Documentary Collaboration Module

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Documentary Credit Life Cycle

1
CONTRACT OF SALE |
Ill open an LC Lets collaborate on the terms through TradeDoX Before I go to the bank

the TradeDoX360 way

Awesome!

Exporter Importer

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.

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Documentary Credit Life Cycle

2
COLLABORATE | the TradeDoX360 way

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

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Documentary Credit Life Cycle

2
COLLABORATE | the TradeDoX360 way

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

2
COLLABORATE | the TradeDoX360 way

Direct linkage to the underlying order to ensure consistency

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Documentary Credit Life Cycle

2
COLLABORATE | the TradeDoX360 way

TradeDoXs collaboration module creates a common ground

It incorporates bilateral viewpoints, to deliver a shared, common understanding of the terms of the LC
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Documentary Credit Life Cycle

3
IMPORTER APPLIES FOR LC
Heres the LC application already to go. And heres the electronic SWIFT code file that you can use to open the LC. All thanks to TradeDoX!

the TradeDoX360 way

Wow! I wish all my other

clients were like this. I think Ill give all my clients a free copy of TradeDoX. Better then giving em t-shirts and pens!

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Documentary Credit Life Cycle

4
LC ISSUED TO EXPORTER | the TradeDoX way

Exporter ships goods and presents the documents to the bank.

Here are the docs exactly as per the LC. NO DISCRAPANCIES! All thanks to TradeDoX!

Wow! I wish all my other clients were like this. I think Ill give all my clients a free copy of TradeDoX. Better then giving em pens and t-shirts!

TradeDoX makes the documents directly from the collaboration

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Documentary Credit Life Cycle

TradeDoXs- 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.

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Documentary Credit Life Cycle

TradeDoXs- Benefits for Importers

TradeDoXs 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.

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Documentary Credit Life Cycle

TradeDoXs- Benefits for Banks

Minimize personnel and staff cost that was needed to check clients 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.

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Documentary Credit Life Cycle

TradeDoXs- Benefits for Freight Forwarders

In todays ever-changing commercial world, conventional means of business communication are not only time consuming; but also hindering to an organizations 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

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Documentary Credit Life Cycle

@ Contact Us

Trade Development Network (TDN) is a leading software development house that only focuses on international trade tools and services; and supports not only small and medium sized exporters and importers but large multi-national trading organizations too in their efforts to integrate their foreign trade business processes with hi-end software solutions. These solutions let companies automate and manage the complexity of their global trade, compliance and logistics processes easily and realize the full potential for developing trade and improving trade operations through ICT.

www.tradev.net

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