Letter of Credit – L/C:

L/C meaning Letter of Credit. Letter of credit is done between applicant to beneficiary. This term is used in commercial department. Letter of Credit -L/C set up is the work of commercial section in garment factory. A commercial officer should have clear concept on letter of credit. It is also called Documentary Credit is a widely used term to make payment secure in domestic and international trade. That’s why Letter of Credit- L/C is very important in apparel manufacturing. We are showing a flowchart here to show the process of L/C

Flow Chart of L/C Letter of Credit

Buyer and Garments manufacturer make sales contract after agreement.

Buyer send letter of credit to buyer issuing bank

Issuing bank send prepared letter of credit to advising bank

Advising bank send letter of credit to  garments manufacturer

Garments manufacturer make shipment to buyer

Garments manufacturer prepare all document to advising bank

Advising bank send all prepared document to buyer

Flow Chart of L/C Letter of Credit 1

Requirement of garments material with specification

To inform about requirement to departmental head

Management will search for the actual requirement

Various company will response with those specification

Then the management select some offers

Then discussion will be among two management

Management will sign the agreement with the selected company / agencies

Then negotiation will take place among management / agencies

Submitting the final PI

Bank will open L/C