Letters of credit accomplish their purpose by substituting the credit of the bank for that of the customer, for the purpose of facilitating trade. There are basically two types: commercial and standby. The commercial letter of credit is the primary payment mechanism for a transaction, whereas the standby letter of credit is a secondary payment mechanism.

Commercial Letter of Credit
Commercial letters of credit have been used for centuries to facilitate payment in international trade. Their use will continue to increase as the global economy evolves.

Letters of credit used in international transactions are governed by the International Chamber of Commerce Uniform Customs and Practice for Documentary Credits. The general provisions and definitions of the International Chamber of Commerce are binding on all parties. Domestic collections in the United States are governed by the Uniform Commercial Code.

A commercial letter of credit is a contractual agreement between a bank, known as the issuing bank, on behalf of one of its customers, authorizing another bank, known as the advising or confirming bank, to make payment to the beneficiary. The issuing bank, on the request of its customer, opens the letter of credit. The issuing bank makes a commitment to honor drawings made under the credit. The beneficiary is normally the provider of goods and/or services. Essentially, the issuing bank replaces the bank's customer as the payee.

Elements of a Letter of Credit

• A payment undertaking given by a bank (issuing bank)
  
• On behalf of a buyer (applicant)
  
• To pay a seller (beneficiary) for a given amount of money
  
• On presentation of specified documents representing the supply of goods
  
• Within specified time limits
  
• Documents must conform to terms and conditions set out in the letter of credit
  
• Documents to be presented at a specified place

Beneficiary
The beneficiary is entitled to payment as long as he can provide the documentary evidence required by the letter of credit. The letter of credit is a distinct and separate transaction from the contract on which it is based. All parties deal in documents and not in goods. The issuing bank is not liable for performance of the underlying contract between the customer and beneficiary. The issuing bank's obligation to the buyer, is to examine all documents to insure that they meet all the terms and conditions of the credit. Upon requesting demand for payment the beneficiary warrants that all conditions of the agreement have been complied with. If the beneficiary (seller) conforms to the letter of credit, the seller must be paid by the bank.

Issuing Bank
The issuing bank's liability to pay and to be reimbursed from its customer becomes absolute upon the completion of the terms and conditions of the letter of credit. Under the provisions of the Uniform Customs and Practice for Documentary Credits, the bank is given a reasonable amount of time after receipt of the documents to honor the draft.

The issuing banks' role is to provide a guarantee to the seller that if compliant documents are presented, the bank will pay the seller the amount due and to examine the documents, and only pay if these documents comply with the terms and conditions set out in the letter of credit.

Typically the documents requested will include a commercial invoice, a transport document such as a bill of lading or airway bill and an insurance document; but there are many others. Letters of credit deal in documents, not goods.

Advising Bank
An advising bank, usually a foreign correspondent bank of the issuing bank will advise the beneficiary. Generally, the beneficiary would want to use a local bank to insure that the letter of credit is valid. In addition, the advising bank would be responsible for sending the documents to the issuing bank. The advising bank has no other obligation under the letter of credit. If the issuing bank does not pay the beneficiary, the advising bank is not obligated to pay.

Confirming Bank
The correspondent bank may confirm the letter of credit for the beneficiary. At the request of the issuing bank, the correspondent obligates itself to insure payment under the letter of credit. The confirming bank would not confirm the credit until it evaluated the country and bank where the letter of credit originates. The confirming bank is usually the advising bank.

Letter of Credit Characteristics

Negotiability
Letters of credit are usually negotiable. The issuing bank is obligated to pay not only the beneficiary, but also any bank nominated by the beneficiary. Negotiable instruments are passed freely from one party to another almost in the same way as money. To be negotiable, the letter of credit must include an unconditional promise to pay, on demand or at a definite time. The nominated bank becomes a holder in due course. As a holder in due course, the holder takes the letter of credit for value, in good faith, without notice of any claims against it. A holder in due course is treated favorably under the UCC.

The transaction is considered a straight negotiation if the issuing bank's payment obligation extends only to the beneficiary of the credit. If a letter of credit is a straight negotiation it is referenced on its face by "we engage with you" or "available with ourselves". Under these conditions the promise does not pass to a purchaser of the draft as a holder in due course.

Revocability
Letters of credit may be either revocable or irrevocable. A revocable letter of credit may be revoked or modified for any reason, at any time by the issuing bank without notification. A revocable letter of credit cannot be confirmed. If a correspondent bank is engaged in a transaction that involves a revocable letter of credit, it serves as the advising bank.

Once the documents have been presented and meet the terms and conditions in the letter of credit, and the draft is honored, the letter of credit cannot be revoked. The revocable letter of credit is not a commonly used instrument. It is generally used to provide guidelines for shipment. If a letter of credit is revocable it would be referenced on its face.

The irrevocable letter of credit may not be revoked or amended without the agreement of the issuing bank, the confirming bank, and the beneficiary. An irrevocable letter of credit from the issuing bank insures the beneficiary that if the required documents are presented and the terms and conditions are complied with, payment will be made. If a letter of credit is irrevocable it is referenced on its face.

Transfer and Assignment
The beneficiary has the right to transfer or assign the right to draw, under a credit only when the credit states that it is transferable or assignable. Credits governed by the Uniform Commercial Code (Domestic) maybe transferred an unlimited number of times. Under the Uniform Customs Practice for Documentary Credits (International) the credit may be transferred only once. However, even if the credit specifies that it is nontransferable or nonassignable, the beneficiary may transfer their rights prior to performance of conditions of the credit.

Sight and Time Drafts
All letters of credit require the beneficiary to present a draft and specified documents in order to receive payment. A draft is a written order by which the party creating it, orders another party to pay money to a third party. A draft is also called a bill of exchange.

There are two types of drafts: sight and time. A sight draft is payable as soon as it is presented for payment. The bank is allowed a reasonable time to review the documents before making payment.

A time draft is not payable until the lapse of a particular time period stated on the draft. The bank is required to accept the draft as soon as the documents comply with credit terms. The issuing bank has a reasonable time to examine those documents. The issuing bank is obligated to accept drafts and pay them at maturity.

Standby Letter of Credit
The standby letter of credit serves a different function than the commercial letter of credit. The commercial letter of credit is the primary payment mechanism for a transaction. The standby letter of credit serves as a secondary payment mechanism. A bank will issue a standby letter of credit on behalf of a customer to provide assurances of his ability to perform under the terms of a contract between the beneficiary. The parties involved with the transaction do not expect that the letter of credit will ever be drawn upon.

The standby letter of credit assures the beneficiary of the performance of the customer's obligation. The beneficiary is able to draw under the credit by presenting a draft, copies of invoices, with evidence that the customer has not performed its obligation. The bank is obligated to make payment if the documents presented comply with the terms of the letter of credit.

Standby letters of credit are issued by banks to stand behind monetary obligations, to insure the refund of advance payment, to support performance and bid obligations, and to insure the completion of a sales contract. The credit has an expiration date.

The standby letter of credit is often used to guarantee performance or to strengthen the credit worthiness of a customer. In the above example, the letter of credit is issued by the bank and held by the supplier. The customer is provided open account terms. If payments are made in accordance with the suppliers' terms, the letter of credit would not be drawn on. The seller pursues the customer for payment directly. If the customer is unable to pay, the seller presents a draft and copies of invoices to the bank for payment.

The domestic standby letter of credit is governed by the Uniform Commercial Code. Under these provisions, the bank is given until the close of the third banking day after receipt of the documents to honor the draft.

Procedures for Using the Tool
The following procedures include a flow of events that follow the decision to use a Commercial Letter of Credit. Procedures required to execute a Standby Letter of Credit are less rigorous. The standby credit is a domestic transaction. It does not require a correspondent bank (advising or confirming). The documentation requirements are also less tedious.

Step-by-step process:

• Buyer and seller agree to conduct business. The seller wants a letter of credit to guarantee payment.
  
• Buyer applies to his bank for a letter of credit in favor of the seller.
  
• Buyer's bank approves the credit risk of the buyer, issues and forwards the credit to its correspondent bank (advising or confirming). The correspondent bank is usually located in the same geographical location as the seller (beneficiary).
  
• Advising bank will authenticate the credit and forward the original credit to the seller (beneficiary).
  
• Seller (beneficiary) ships the goods, then verifies and develops the documentary requirements to support the letter of credit. Documentary requirements may vary greatly depending on the perceived risk involved in dealing with a particular company.
  
• Seller presents the required documents to the advising or confirming bank to be processed for payment.
  
• Advising or confirming bank examines the documents for compliance with the terms and conditions of the letter of credit.
  
• If the documents are correct, the advising or confirming bank will claim the funds by:
  
  • Debiting the account of the issuing bank.
    
  • Waiting until the issuing bank remits, after receiving the documents.
    
  • Reimburse on another bank as required in the credit.
    
• Advising or confirming bank will forward the documents to the issuing bank.
  
• Issuing bank will examine the documents for compliance. If they are in order, the issuing bank will debit the buyer's account.
  
• Issuing bank then forwards the documents to the buyer.

Standard Forms of Documentation
When making payment for product on behalf of its customer, the issuing bank must verify that all documents and drafts conform precisely to the terms and conditions of the letter of credit. Although the credit can require an array of documents, the most common documents that must accompany the draft include:

Commercial Invoice
The billing for the goods and services. It includes a description of merchandise, price, FOB origin, and name and address of buyer and seller. The buyer and seller information must correspond exactly to the description in the letter of credit. Unless the letter of credit specifically states otherwise, a generic description of the merchandise is usually acceptable in the other accompanying documents.

Bill of Lading
A document evidencing the receipt of goods for shipment and issued by a freight carrier engaged in the business of forwarding or transporting goods. The documents evidence control of goods. They also serve as a receipt for the merchandise shipped and as evidence of the carrier's obligation to transport the goods to their proper destination.

Warranty of Title
A warranty given by a seller to a buyer of goods that states that the title being conveyed is good and that the transfer is rightful. This is a method of certifying clear title to product transfer. It is generally issued to the purchaser and issuing bank expressing an agreement to indemnify and hold both parties harmless.

Letter of Indemnity
Specifically indemnifies the purchaser against a certain stated circumstance. Indemnification is generally used to guaranty that shipping documents will be provided in good order when available.

Common Defects in Documentation
About half of all drawings presented contain discrepancies. A discrepancy is an irregularity in the documents that causes them to be in non-compliance to the letter of credit. Requirements set forth in the letter of credit cannot be waived or altered by the issuing bank without the express consent of the customer. The beneficiary should prepare and examine all documents carefully before presentation to the paying bank to avoid any delay in receipt of payment. Commonly found discrepancies between the letter of credit and supporting documents include:

• Letter of Credit has expired prior to presentation of draft.
  
• Bill of Lading evidences delivery prior to or after the date range stated in the credit.
  
• Stale dated documents.
  
• Changes included in the invoice not authorized in the credit.
  
• Inconsistent description of goods.
  
• Insurance document errors.
  
• Invoice amount not equal to draft amount.
  
• Ports of loading and destination not as specified in the credit.
  
• Description of merchandise is not as stated in credit.
  
• A document required by the credit is not presented.
  
• Documents are inconsistent as to general information such as volume, quality, etc.
  
• Names of documents not exact as described in the credit. Beneficiary information must be exact.
  
• Invoice or statement is not signed as stipulated in the letter of credit.

When a discrepancy is detected by the negotiating bank, a correction to the document may be allowed if it can be done quickly while remaining in the control of the bank. If time is not a factor, the exporter should request that the negotiating bank return the documents for corrections.

If there is not enough time to make corrections, the exporter should request that the negotiating bank send the documents to the issuing bank on an approval basis or notify the issuing bank by wire, outline the discrepancies, and request authority to pay. Payment cannot be made until all parties have agreed to jointly waive the discrepancy.

Tips for Exporters

• Communicate with your customers in detail before they apply for letters of credit.
  
• Consider whether a confirmed letter of credit is needed.
  
• Ask for a copy of the application to be fax to you, so you can check for terms or conditions that may cause you problems in compliance.
  
• Upon first advice of the letter of credit, check that all its terms and conditions can be complied with within the prescribed time limits.
  
• Many presentations of documents run into problems with time-limits. You must be aware of at least three time constraints - the expiration date of the credit, the latest shipping date and the maximum time allowed between dispatch and presentation.
  
• If the letter of credit calls for documents supplied by third parties, make reasonable allowance for the time this may take to complete.
  
• After dispatch of the goods, check all the documents both against the terms of the credit and against each other for internal consistency.

Summary
The use of the letters of credit as a tool to reduce risk has grown substantially over the past decade. Letters of credit accomplish their purpose by substituting the credit of the bank for that of the customer, for the purpose of facilitating trade.

The credit professional should be familiar with two types of letters of credit: commercial and standby. Commercial letters of credit are used primarily to facilitate foreign trade. The commercial letter of credit is the primary payment mechanism for a transaction.

The standby letter of credit serves a different function. The standby letter of credit serves as a secondary payment mechanism. The bank will issue the credit on behalf of a customer to provide assurances of his ability to perform under the terms of a contract.

Upon receipt of the letter of credit, the credit professional should review all items carefully to insure that what is expected of the seller is fully understood and that he can comply with all the terms and conditions. When compliance is in question, the buyer should be requested to amend the credit.

领带的打法
1、平结
        平结为最多男士选用的领结打法之一，几乎适用于各种材质的领带。
        要诀：领结下方所形成的凹洞需让两边均匀且对衬。


2、交叉结
　　这是对于单色素雅质料且较薄领带适合选用的领结，对于喜欢展现流行感的男士不妨多加使用“交叉结”。


3、双环结
　　一条质地细致的领带再搭配上双环结颇能营造时尚感，适合年轻的上班族选用。该领结完成的特色就是第一圈会稍露出于第二圈之外，可别刻意给盖住了。

4、 温莎结
　　温莎结适合用于宽领型的衬衫，该领结应多往横向发展。应避免材质过厚的领带，领结也勿打得过大。


5、双交叉结
　　这样的领结很容易让人有种高雅且隆重的感觉，适合正式之活动场合选用。该领结应多运用在素色且丝质领带上，若搭配大翻领的衬衫不但适合且有种尊贵感。


6、亚伯特王子结
　　适用於浪漫扣领及尖领系列衬衫，搭配浪漫质料柔软的细款领带。正确打法是在宽边先预留较长的空间，在绕第二圈时尽量贴合在一起即可完成此一完美结型。


7、四手结(单结)
　　是所有领结中最容易上手的，适用於各种款式的浪漫系列衬衫及领带。

8、浪漫结
浪漫是一种完美的结型 ，故适合用於各种浪漫系列的领口及衬衫 。完成後将领结下方之宽边压以绉摺可缩小其结型 ，窄边亦可将它往左右移动使其小部份出现於宽边领带旁。


9、简式结(马车夫结)
适用於质料较厚的领带 。最适合打在标准式及扣式领口之衬衫，将其宽边以180度由上往下翻转 ，并将折叠处隐藏於後方，待完成後可再调整其领带长度 。是最常见的一种结形。


10、十字结(半温莎结)
　　此款结型十分优雅及罕见 ，其打法亦较复杂 ，使用细款领带较容易上手 。最适合搭配在浪漫的尖领及标准式领口系列衬。

一、领带的起源：

17世纪中叶，法国有一位大臣上朝，在脖领上系了一条白色围巾，还在前面打了一个漂亮的领结，路易十四国王见了大加赞赏，当众宣布以领结为高贵的标志，并下令上流人土都要如此打扮。由此可见，领带起源于欧洲。领带作为一种古老的传统产品，一直是作为尊贵地位的注解。一条做工精美手感柔和的领带是每一位男性的经典装饰。
　　
二、现代领带的范围：

在当今社会环境下，男士的形象就是走向成功的第一步。文雅、沉稳、温情是文明社会对男士的形象要求。领带作为男士服饰的一部分，充分体现了领带作为服装饰品的丰富内涵，为男土独特而深沉的内心世界做了最好的形象注解。因此，领带在经历了服饰潮流的漫长考验的今天，随着人类文明的迅猛发展和审美时尚的不断更新，以它独有的灵魂和个性愈来愈受男士的青睐和推崇。
　　
三、领带的识别：

领带品质的优劣，从根本上来说并非取决于款式与品牌，面是取决于其材料的质地与做工的考究性。

材料识别方法有三条：
(1)识别相关材料标志：包织真丝100% SILK 100％；真丝100% SILK 100%；仿真丝100% POLYESTERI00%；涤丝100% DACRON。
(2)视觉与手感的区别：真丝 色彩润泽、柔和、手感细腻；仿真丝：色光发亮，跳眼，手感挺刮涤丝 颇色黯淡较沉、手感粗糙。
(3)材料的厚薄区别： 真丝以14-—16姆米为佳；仿真丝、涤丝以手感适当为佳。

做工考究鉴别五点：
1、标准的领带是由三段拼接而成，总长度为145cM，角度为45·接位位。
2，表面光洁，花型清晰，对称；
3，背面拉缝垂直居中；
4、拼接处的花纹的一致程度；
5．整条短带面料色差的一致性与否。
　　
四、领带的搭配选择：

1、黑色西服，采用银灰色、蓝色调或红白相间的斜条领带，显得庄重大方，沉着稳健；
2、暗蓝色西醒，采用蓝色．深玫瑰色。橙黄色、褐色领带，显得纯朴大方，素静高稚；
3、乳白色西服，采用虹色或褐色的领带，显得十分文雅，光彩夺目；
4、中灰色西服，配系砖红色．绿色、黄色调的领带，男有一番情趣；
5、米色西服采用海蓝色，褐色领带，更能星爵风采动人，风度翩翩。
　　
五、领带的打法和特点：

领带打法的共同准备阶段：将领带大头在右，小头在左，大头在上，小头在下，并且以大头端的长度大约是小头端长度的3倍的比例交叉在颈前。
　　
六、领带的保养：

1. 使用过后，请立即解开领结，并轻轻从结口解下；因用力拉扯表布及内衬，纤维极易断裂，并造成永久性的皱折。
2. 每次戴完，解口结开后，请将领带对折平放或以领带架吊起来，并留意置放处是否平滑；以避免刮伤领带。
3. 开车系上安全带时，勿将领带绑于安全带内；以避免产生皱折。
4. 同一条领带戴完一次，请隔几天再戴，并先将领带置于潮湿温暖的场所或喷少许水，使其皱折处恢复原状后，再收至干燥处平放或吊立。
5.沾染污垢时，立即干洗。
6. 处理结口皱纹，请以蒸气熨斗底温烫平；水洗及高温熨烫，容易造成变形而受损。
春季型色彩搭配

职业装色彩特点：宜选择驼色、棕色、浅灰以及饱和度略高的蓝色作西装色，尽量回避用黑、深灰、藏蓝色作西装色。

衬衫: 宜选用浅淡明快的颜色。

领带: 选择色彩群中明亮、鲜艳的颜色。

休闲装色彩特点：选择色群中明亮的颜色、与驼色、棕色系列搭配。

适合的搭配原则：对比搭配

适合的面料色彩感觉：色饱和度高

鞋袜色彩：应与裤子的颜色一致或渐变搭配。


夏季型色彩搭配

职业装色彩特点： 宜选择蓝灰、灰蓝、灰色等冷色作西装色，回避用深棕色系列作西装色。

衬衫：选择浅灰、蓝、紫、淡粉等柔和的颜色。

领带：选择色彩群中浅淡、柔和、雅致的颜色。

休闲装色彩特点：选择色彩中柔和、清爽的颜色，与蓝灰、灰蓝、灰、乳白等搭配。

适合的搭配原则：渐变搭配

鞋袜色彩：应与裤子的颜色一致或渐变搭配。


秋季型色彩搭配

职业装色彩特点：宜选择棕色、深毛蓝色、橄榄绿等深色调的暖色作西装色，尽量回避用黑、灰、饱和度高的蓝色作西装色。

衬衫: 选择以黄为基调，雅致而稳重的颜色。

领带: 选择色彩群中浓郁一些的颜色。

休闲装色彩特点：选择色群中浓郁、鲜艳的颜色，与棕色系列搭配。

适合的搭配原则：渐变搭配

适合的面料色彩感觉：色饱和度低

鞋袜色彩：应与裤子颜色一致或渐变搭配。

冬季型色彩搭配

职业装色彩特点：宜选择黑、灰、藏蓝色等深色调的冷色作西装色，回避用棕色系列作西装色。

衬衫: 宜选用白色，明亮的冰色系。

领带: 选择色彩群中明亮、鲜艳饿颜色。

休闲装色彩特点：选择色彩中鲜艳、饱和度高的颜色，与黑，白，灰和冰色系搭配。

适合的搭配原则：对比搭配

适合的面料色彩感觉：色饱和度高.

鞋袜色彩：应与裤子的颜色一致或渐变搭配

Last updated: September 02, 2005