CAD : Cash against Documents Payment is made to bank to get documents ,Normally vendors prefer this kind of payment as it ensures the payment prior to actual deliver of consignment .Please ensure that documents are endorsed by bank and shipper as this is most important conditions for shipping line .
L/C : Letter of Credit A letter of credit is a document issued mostly by a financial institution which usually provides an irrevocable payment undertaking (it can also be revocable, confirmed, unconfirmed, transferable or others e.g. back to back: revolving but is most commonly irrevocable/confirmed) to a beneficiary against complying documents as stated in the Letter of Credit. Letter of Credit is abbreviated as an LC or L/C, and often is referred to as a documentary credit, abbreviated as DC or D/C, documentary letter of credit, or simply as credit .Once the beneficiary or a presenting bank acting on its behalf, makes a presentation to the issuing bank or confirming bank, if any, within the expiry date of the LC, comprising documents complying with the terms and conditions of the LC, . In other words, the obligation to honour (usually payment) is shifted from the applicant to the issuing bank or confirming bank, if any. Non- banks can also issue letters of credit however parties must balance potential risks.
The LC can also be the source of payment for a transaction, meaning that an exporter will get paid by redeeming the letter of credit. Letters of credit are used nowadays primarily in international trade transactions of significant value, for deals between a supplier in one country and a wholesale customer in another. They are also used in the land development process to ensure that approved public facilities (streets, sidewalks, storm water ponds, etc.) will be built. The parties to a letter of credit are usually a beneficiary who is to receive the money, the issuing bank of whom the applicant is a client, and the advising bank of whom the beneficiary is a client. Since nowadays almost all letters of credit are irrevocable, (i.e. cannot be amended or cancelled without prior agreement of the beneficiary, the issuing bank and the confirming bank, if any). However, the applicant is not a party to the letter of credit. In executing a transaction, letters of credit incorporate functions common to giros and Traveler's cheques. Typically, the documents a beneficiary has to present in order to avail himself of the credit, are commercial invoice, bill of lading, insurance documents. However, the list and form of documents is open to imagination and negotiation and might contain requirements to present documents issued by a neutral third party evidencing the quality of the goods shipped.
DOCUMENTS (SEA CONSIGNMENT)
BILL OF LADING
This document has details of port of discharge , port of loading , vessel name , material description, bill of lading no , qty , weight ,container this document has to be in 3 original ( first original , second and third original with 3 copies of non - negotiable bill of lading ).This document is surrendered to shipping line mentioned in bill of lading for tittle of consignment .
Consignment can be claimed by issuing bank guarantee to shipping line against deposit of original document .Later submitting the documents to claim the bank guarantee.
CERTIFICATE OF ORIGIN
This declares the origin of material from where it has originated .It is certified either govt agencies in some countries or by chambers of commerce .
1original + 3 copies are to be submitted
PACKING LIST
Here supplier declares the qty , weights and no of boxes which are loaded in container
1 original + 3 copies
INVOICE Bill issued for payment is made as per the contract or purchase order value . 1 original+ 3 copies
DELIVERY ORDER
Issued by shipping companies to consignee after submission of original of bill of lading for collection .The deivery consists of validity period against which material has to be lifted .
LEGALISATION Required for exemption of duty .Govts provided exemption to certain manufacturers benefit on imported goods. Legalisation are either done from banks or through govt agencies .
CUSTOM DUTY
Levy govt charges on goods imported from other country . It varies from country to country and items to items .