Letters of CreditGetting Paid Under

An Irrevocable Documentary Credit

Karen Dunlap

Dunlap International, Inc.

Letter of Credit

Summary of a contract between seller and buyer with the bank(s) as referee.

Governed by UCP 500

The Beginning: An Offer and an Acceptance

• Formal Contract• Seller’s Quotation/

Proforma Invoice and Buyer’s Purchase Order

• Order placed over the internet

PROFORMA INVOICE Critical First Step

A PROFORMA INVOICE is an invoice provided by a supplier prior to the shipment of merchandise, informing the buyer of the kinds and quantities of goods to be sent, their value, and important specifications (payment terms, time of shipment, weights and dimensions, shipping terms, etc.).

Essentially the proforma invoice is a quotation laid out in the format of your proposed billing invoice summarizing the key terms of your sales contract .

When is a Proforma Invoice required?

1. To enable the Buyer to open a Letter of Credit.

2.To enable the Buyer to obtain an Import License (and foreign currency exchange).

A Proforma is useful anytime you need to communicate your expectations clearly!