Method of payment of import export transactions can basically be done in several ways, namely:
1. Payment is made in advance,
2. Payment is made with bills of collection / Collection Draft,
3. Payment is made dg defered payment,
4. Payments are made dg consignment,
5. Payment is made dg usance or sight letter of credit,
6. Payments made other dg.
L/C is any agreement whatever the name or intention, which a bank (issuing bank) acting on requests and instructions of a customer (applicant) or in its own name:
1. Make payment to third party (beneficiary) or orders (the person who is appointed by a third party), or accepting / paying bank drafts wich drawned by customers
2. Empower to others banks to make a payment, or to accept and pay the drafts
3. Empower to others bank to negotiation, on payment of specified documents, the origin of the terms and conditions of the relevant credits have been fulfilled.
PURPOSE OF USE OF L / C
PURPOSE FOR EXPORTERS:
To provide a guarantee / security for get payment on commodity wich being sold.
PURPOSE FOR IMPORTERS:
To provide assurance that its partner bank (issuing bank) would not have to make payments before the indicated requirements document in L/C is filled
Eko Tjiptojuwono, S.E., MM
Sumber : http://eko.tj.nscpolteksby.ac.id/2015/06/10/mekanisme-pembayaran-dengan-letter-of-credit/