Revolving letter of credit

[Amano]

I would appreciate your assistance please.

I am supplying a crane to Africa. The buyer will set up irrevocable revolving letter of credit.

Eg- crane price $100k. To be paid $10k every month for 10 months

Please advise what the procedure be
-to start the LC
-how to word revolving payments
- what dates to setup
- how the payments can be continual for full 10 months, even if the crane is lost or stolen

[dinesh2476]

Amano,

It stands different from the other type of LC's. simple understanding is instead of amendments increasing LC value , considering the long standing relation with app/IB and app/Ben, LC made to include a condition that allows draw a claim every month.

LC value $10k and a condition allowing to instate the LC value by 1st of every month till end of the 10th Month.
but the problem is we need to be very careful in terms of selecting the documents to be presented claiming payment at every month.

Thanks & Regards
Dinesh Kumar

[Amano]

Dinesh

Many thanks yours.

Can the documents be be set as only ‘invoice required’ to be submitted? So the LC would be a revolving LC, with 10k every month for 10 month revolving?

Many thanks

Amano

[picant]

Hi Pals,

being a no native speaker I could misunderstand something: in this case we are not in presence of a revolving l/c, this is just a l/c paid by 10 monthly instaltment. The crane will be wholly shipped, invoiced
and paid partially every succeding month. Revolving L/C is concerning different shipments, periodically
sent, and paed.
Other comments appreciated
Ciao

[Amano]

Many thanks yours. Interesting, further comments appreciated.

[JAX1066]

Hi
I agree with Picant - this does not appear to be a revolving LC as there is only one shipment which will be paid in 10 equal instalments.

Revolving credits are typically used when goods of the same nature are to shipped regularly, thus negating the need to keep issuing a new L/C once one is fully drawn/goods fully shipped.
Thanks
Jackie