1. + Cash in Advance Neutral Zone + Insurance Ex-Im Bank CEFO Letters of Credit Standby Commercial (Acceptances) Confirmed Transferable Back-to-Back Assignment of Proceeds Foreign Exchange Documentary Collection Open Account Foreign Receivables Positive - Negative - Importer (Buyer) (Applicant) Exporter (Seller) (Beneficiary) Vendor Financing Methods of Payment Risk Assessment Shipment

2. Letter of Credit Terms Involved Parties: TermDefinitionActivity ApplicantImporterBuy BeneficiaryExporterSell Opening BankImporter’s BankIssues L/C Advising BankExporter’s BankAdvises L/C Confirming BankAdvising Bank or 3rd Party Bank Confirms L/C Paying BankAny bank as specified in L/C Pays the Draft

3. Letter of Credit Terms Activities & Terms Advice Amendment Confirmed Discrepancy Documentation Draft – –Sight Draft –Time Draft Irrevocable Issuance Negotiation Revocable

4. Types of Letters of Credit Back-to-Back Confirmed Straight Negotiation Sight Standby Transferable Usance

5. 7. Documents 3. Letter of Credit Applicant Importer/Buyer Exporter’s Bank/ Advising Bank Importer’s Bank/ Issuing Bank Buyer & Seller Agree 6. Documents 8. Documents 2. Application 1. 5. Product is Shipped 2. 9. 10. Export Letter of Credit Cycle 4. Letter of Credit Beneficiary Exporter/Seller

6. Documentary Collection Terms Buyer Seller Remitting Bank Collecting Bank Bill of Exchange/Draft Time/Usance Bill of Exchange

7. 4. Documents & Draft Exporter/Seller Exporter’s Bank/ Remitting Bank Importer’s Bank/ Collecting Bank Buyer & Seller Agree 3. Documents & Draft 6. Documents 1. 2. Product is Shipped 5. Documentary Collection Importer/Buyer