1
Sale agreedBuyer and seller agree the trade and use an LC.
How an LC Moves from Start to Payment
See the normal flow in six small steps.
The six steps at a glance
Read this first if you want the simple big picture before the detailed steps.
2
LC requestedThe buyer asks its bank to issue the LC.
3
LC advisedThe credit is sent through banks to the seller's side.
4
Goods shippedThe seller performs and obtains the required documents.
5
Documents presentedThe seller presents documents through the stated route.
6
Documents checkedThe bank checks compliance, then payment timing follows the LC.
Remember: shipment alone does not force payment. A complying presentation matters.
Step 1 — Sale agreed
Buyer and seller agree the commercial deal and the payment method.
Step 2 — LC requested
The applicant asks its bank to issue the LC.
Step 3 — LC advised
The issuing bank sends the credit through the banking channel to the advising side.
Step 4 — Goods move
The beneficiary performs the trade and obtains the required documents.
Step 5 — Documents presented
The beneficiary presents the documents through the stated banking route.
Step 6 — Documents examined
The bank checks the presentation against the credit and the applicable documentary-credit rules.
Payment timing then follows the type of availability and tenor stated in the LC.
Remember thisShipment and payment are connected by documents, not by the bank watching the cargo.
Lesson check0 / 2 answered · 0 correct
Check 1
What normally happens before the bank can examine a presentation?
Check 2
Does shipment alone automatically mean the bank must pay?
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