Inventory Classification

 























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Definition of Letter of Credit

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  Types of Letters of Credit (LC) Various types of Letters of Credit (LC) prevail in trade transactions. In this post, we are classifying them by their purpose. Commercial, Export / Import, Transferable and Non-Transferable, Revocable and Irrevocable, Standby, Confirmed, and Unconfirmed, Revolving, Back-to-Back, Red Clause, Green Clause, Sight, Deferred Payment, and Direct Pay LC. A Letter of Credit  is an essential financial tool in trade transactions. In domestic and international markets, trades use the LC to facilitate payments and transactions. A bank or a financial institution acts as a third party between the buyer and the seller and assures the cost of funds on completing certain obligations. Definition of Letter of Credit An LC is a financial document provided by a third party (with no direct interest in the transaction), mainly a bank or a financial institution, that guarantees the payment of funds for goods and services to the seller once the seller submits the r...
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Types of Bill of Lading

  Classification of Bill of Lading | Types of Bill of Lading Classification of Bill of Lading The Bill of Lading can be divided based on different attributes. Let us discuss the types of bills of lading.   Based on carrier 1. Master Bill of Lading (MBL):  Once goods are received by the shipping line/carrier and the vessel is sailed, the shipping line issues a Bill of Lading to the booking party (in case of direct booking, the booking party is the shipper, but if house B/L is involved then booking party will be a freight forwarder), that Bill of Lading is known as the Master Bill of Lading.   2. House Bill of Lading (HBL):  Once goods are received by the shipping line, and the vessel is sailed, the shipping line issues a Master Bill of Lading to the freight forwarder, and the freight forwarder issues a House Bill of Lading to the shipper. For each HBL there is an MBL. Based on payment & condition of goods 3. Clean Bill of Lading:   Carrier issu...
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How to work DP at sight payment?

  How to work DP at sight payment? "DP at sight" refers to a "Documents Against Payment" payment term, where the buyer pays for the goods only after receiving and inspecting the required shipping documents. This payment method offers less security to the seller compared to a "Documents Against Acceptance" (DAA) payment, where payment is made after the buyer accepts the documents and the shipment. Here's how DP at sight payment works: The seller ships the goods and provides the required shipping documents, such as the bill of lading and the commercial invoice, to the buyer. The buyer inspects the documents and verifies that they match the terms of the purchase order. If the documents are in order, the buyer pays the agreed amount to the seller or their bank. The seller's bank releases the shipping documents to the buyer, allowing them to take possession of the goods. The buyer can then arrange for the goods to be cleared through customs and transpor...
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