Makalah Letter of Credit dari Miss Fitri POLNES
PREFACE
This
paper is made by the author as the fulfillment of the task of english for
accounting course, with Letter of Credit material. Together with this
introduction, the author would like to thank all those who have assisted the author
in completing this paper.
First
of all the author wants to give thanks to the presence of Allah SWT, because
without his permission the author will not be able to finish this paper,
The
authors strongly hope that constructive criticism and suggestions can be
manually author can fix it.
The
authors also hope this paper can provide benefits and can be a learning
material for writers and readers, as well as to reply.
Samarinda,
October 18, 2017
Author
TABLE OF CONTENTS
PREFACE................................................................................................................ i
TABLE
OF CONTENTS........................................................................................ ii
CHAPTER
I INTRODUCTION
1.1. Issue Background.................................................................................... 1
1.2. Problem.................................................................................................... 2
1.3. Purpose.................................................................................................... 2
CHAPTER
II DISCUSSION
2.1. The Basic Letter of Credit....................................................................... 3
2.2. Mechanism Letter of Credit.................................................................... 3
2.3. The Variations Letter of Credit............................................................... 3
CHAPTER
III CLOSING....................................................................................... 6
REFERENCES........................................................................................................ 7
CHAPTER I
INTRODUCTION
1.1.
Issue Background
Officially, there is no
fairness, that if it is no
country fulfill its needs only by taking on goods produced from the own country. So that, it requires the supply
of goods obtained from abroad either in the form of food, industrial materials or other goods
and services provided.
The limitation is triggered
by the activity of buying
and selling mechandise
of goods and services, interchange market (Export-Import process)
will be conducted.
The
problem faced is how to resolve conditions where the seller and buyer in the
activity is limited by long distances and long travel time, it makes difficult for taking transactions
by cash. This raises concerns by both parties, the risk of loss if each party does not fulfill its obligations. Letter of credit is a way to
can be used as a tool to facilitate importers in conducting international trade
transactions involving the two banks between countries that international trade
transaction as well as with its advanced capabilities technology can now
facilitate the parties involved in a transaction in a payment using the online
system, the two parties must be mutually trusted so that there is no party
which aggred.
In
conducting international transactions or trading between countries, such as export –
import transaction, the coupled with the amount
and price are quite large and high, then it
certainly
will be different from the local transaction or reguler transaction. The
differences are in terms of regulations, mechanisms, payments, etc.
In addition, in the case of transactions
between countries, it can usually
not be done personally only between sellers and buyers, because in this case it is needed parties to help
handle the financing traffic in this international transaction. Transactions
between countries, especially with large and high numbers and prices, it susually require an
institution that can be used as a payment intermediary to facilitate the
financing traffic and even provide a guarantee of security to sellers and
buyers between these countries. These institutions are Foreign Exchange Banks,
which serve and issue Letter of Credit (L / C).
Although the
Letter of Credit (L / C) is issued by the Bank, the Bank deals only with
documents not with goods. Letter of Credit itself has several roles not only as
an instrument to facilitate the financing of international trade, but also there are still some
other roles.
In Indonesia, the
control of a Letter of Credit (L / C), may serve as the basis for the
application of "Export Credit" to obtain funds earlier than the opening
bank, to be used as working capital in producing goods facilitated by the
Letter of Credit .
Therefore
in this paper, the author will discuss about The Basic Letter of Credit and
Variations of letter of credit.
1.2.
Problem
1.2.1. What
is the basic letter of credit?
1.2.2.
What
is the variations letter of credit?’
1.2.3.
How much important letter of credit in international trading?
1.3.
Purpose
1.3.1. For understand the basic letter of credit.
1.3.2. For understand the variations letter of
credit.
1.3.3. For understand how important letter of credit international
trading.
CHAPTER II
DISCUSSION
2.1.
The Basic Letter of Credit
The
letter of credit is the most widely used intrument of international banking. It
has had a long and successful history as a means of facilitating international
trade. Particulary during times of economic and political uncertainly.
Henry
Harfield, said that “A Letter of Credit is a legally enforcable promise by an
issuer to a beneficiary”
2.2. Mechanism
Letter of Credit
2.3. The
Variations Letter of Credit
2.3.1. Revocable
L/C
L
/ C that may be amended or canceled any time by the buyer (the account party)
without the approval of the seller (the beneficiary). Since it does not provide
any protection to the seller, it is rarely used. Some banks even refuse to
issue such litigation between the buyer and the seller.
2.3.2. Irrevocable
L/C
An irrevocable letter of credit (ILOC) is
official correspondence from a bank that guarantees payment for goods or
services being purchased by the individual or entity, referred to as the
applicant, that requests the letter of credit from an issuing bank. An
irrevocable letter of credit cannot be canceled, nor in any way modified,
except with the explicit agreement of all parties involved: the buyer, the
seller and the issuing bank. For example, the issuing bank does not have the
authority by itself to change any of the terms of an ILOC once it is issued.
2.2.3
Irrevocable and Confirmed L/C
This
l/C is considered the most perfect and most secure from the recipient of the
L/C (beneficiary) as payment or repayment of money orders drawn up this l/c
guaranteed entirely by the opening bank or by advising banks, when all the
conditions are met, as well as It's not easy being cancelled because of its
irrevocable.
2.2.4
Clean L/C
In
the L/C this is not noted in other terms for the withdrawal of a money order.
That is, no other documents are required, even taking money from of available
credit may be made with then submission of receipts.
2.2.5
Documentary L/C with Red Clause
This type of l/c, L/C recipient (beneficiary)
are given the right.
2.2.6
Documentary L/C
Withdrawal of money or
credit available has to be complemented by other documents as referred to in
the terms of l/c.
to withdraw a portion of
the amount of the l/c are available with the submission of receipts or by the
withdrawal of money without the need for other documents, while the rest is
carried outas in the case documentary L/C this is a combination of open L/C
with documentary l/c.
2.2.7
Revolving L/C
This allows the l/c
available credit be without changes to special conditions in the l/c. For
example, for a period of six months, credit is available each month at US
$1,200, meant automatically every month (for six months) credit available for
US $1,200, no matter if the number was used or not.
2.2.8
Back to Back L/C
In this L/C, recipient
(beneficiary) is usually not the owner of the goods, but only an intermediary.
Therefore, the recipient of the l/c is forced to ask his bank's help to open
the l/c to the owner of the actual goods with guaranted L/C received from
abroad.
2.2.9
Transferable L/C
Beneficiary entitled to
memnita to bank mandated to make payment/acceptance speeches are to every bank
that has the right to conduct the negotiations, to handing over rights to
credit fully/partly to third parties
2.2.10
Stand by Letter of Credit
A special guarantee of
his usual is used as a "stand-by" by the beneficiary or bank on
behalf of his clients. In this case if the applicant party failed to execute a
contract/fail to pay the loan/meet his loan, the Bank concerned will pay to the
beneficiary upon the submission of a sight draft & waiver from party
beneficiary stating that applicant or contractor can not carry out the approved
contract, Pay/meet its.
CHAPTER
III
CLOSING
Letter of credit is a sale and purchase
agreement agreed between the seller and the buyer of international trade
transactions, which contains the promise of the buyer to pay for goods after
the seller meets certain conditions. By making the bank as. Letter of credit is
also a requirement to conduct international trade transactions.
From both types of letters of credit,
irrevocable and confirmation of both credits is the best type to use because by
using this type of interested parties warranty of goods on condition whether
the conditions have been levied without a unilateral cancellation by the buyer
because of its irrevocabel
At
the core of this last credit serves to facilitate the importer or security in
conducting international trade transactions and provide warranty and security.
Letter
of Credit does play a very important role in business activity or transactions
between countries, therefore in the implementation of Letter of Credit (L / C,
LC, LOC) must be in accordance with the applicable universal provisions in the
procedure and situation, it is also very influential for the sake of continuity
of business activity. It is recommended for all parties to be careful to check
the completeness of other documents so as to avoid the risk of harm. So that
the goods and payment will be guaranteed security. helpful.
The
authors hope this paper can be useful for readers and can be used as learning
for readers, although this paper is very limited.
REFERENCES
Anonim.
Irrevocable
Letter Of Credit - ILOC. (http://www.investopedia.com/terms/i/iloc.asp.
Diakses 18 Oktober 2017).
________ Revocable Letter Of Credit (L/C). (http://www.businessdictionary.com/definition/revocable-letter-of-credit-L-C.html.
Diakses 18 Oktober 2017).
________ 2015.
Pengertian Letter Of Credit Jenis Pihak
Transaksi Tahapan Penerbitan Dasar Pengaturan dalam Perbankan (http://www.landasanteori.com/2015/09/pengertian-letter-of-credit-jenis-pihak.html.
Diakses 18 Oktober 2017).
________ 2017.
Modul Ajar : English for Accounting 1.
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