Letter of Credit in Export

Dear All,
Can anybody help me with the config guide for Letter of Credit in Export Sales.
Points shall be awarded for the best resolution.
Best Regards,
Indrajit

Dear indrajit
run VX11N and maintain the L/C details there and once saved, a reference number will be generated. Go to sale order, select at Header tab Billing and assign this reference in the field Financial doc no
thanks
G. Lakshmipathi

Similar Messages

Letter Of Credit During Export sales

Hellos Experts,
                         This is neo, I work for the client were they have export sales so they have the Letter Of Credit during the process. Now the scenario is that.
I know some thing like I did the configuration setting for this In IMG (Foreign trade and customs >> Documentary payments) every thing is 5n. and the process which i fallow is
va01
vx11n
vl01n-PGI also
VF01
VF02-release to accounting.
when i am doing the sales order in the line item i am entering the LC num:":82" and saved the document. After this when i see the VX12N the 82 number then the lc value is decreased. after the completing of delivery and invoice and release also when im going to check the value of LC 82 is reamins same.
here my qutions are:
1) how to do the export sales process with LC
2)the process which i fallow is correct or wrong
3) what is the use of
     a) VKM3
     b) VKm5
     c) VXA3
4) if during this process do i need to release the document using any special transaction codes
5) The Main can I use Single LC to Multiple sales Orders.
thanks and regards,
Neo
Edited by: neo.anu on Jul 24, 2010 7:32 AM

Dear indrajit
run VX11N and maintain the L/C details there and once saved, a reference number will be generated. Go to sale order, select at Header tab Billing and assign this reference in the field Financial doc no
thanks
G. Lakshmipathi

Letter of Credit for Exports

Hi Everyone,
We have a scenario where customer have multiple sale ordes and for all of them they have opened a single LC. Can you please let us know how can we assign same LC to different Sales order and most importantly how can we have a control to check if the orders amount doesn't exceed the LC amount.
Thanks.
Asad

Dear Asad,
The system will allow you to enter a single LC for multiple Sale orders. The LC is created wrt to customer only not wrt sale order.
The only check the system will do is the value. The LC should also be set to satus "D- Ready & available for use" so that it can be used in sale orders. In the customer master activate the tolerance grp as LC so that the check can be activated.
By standard the system will check for sale order values with LC value, sale order date with LC opening date, delivery date with LC validity end date. But you can play in LC using overdraft % in LC for minor difference in values.
regards,
S.S.Kumar

How to track Letter of credit in FI Module.

Dear Gurus,
(Exports scenarios)
I have configured letter of credit for customer's export scenario. At end user level we are creating letter for credit using VX11N. Once the letter of credit is created, we link it to the sales order at header level in billing document tab - financial document field.
I would like to know how can we track this letter of credit in FI module? For example if we receive payment from the bank against letter of credit which is linked to sales order then how will we be able to track that letter of credit while entering the customer payment in FI module.
Also help me understand whether I am posting it to right forum, as I am posting the question for the first time here.
Please advice. Thank you.
Edited by: jayfanse on Jun 9, 2011 5:25 PM
Edited by: jayfanse on Jun 9, 2011 5:26 PM

Dear Jay,
We are also using letter of credit sale in our company but the LC payment is normal from accounting side when ever Accounts receive LC payment from the customer they will post it against customer account (Customer Code) and write the Text this payment against so and so LC and Commercial Invoice Number if you run FBL5N Report you can see this text.
There are some reports to check the LC sales scenario: VXA1, VXA2 & VXA3
Regards,
MH

Letter of Credit functionality and Credit Management

Hi,
we want to use Letter of Credit functionality for exports.
Currently, we have an ERP system that contains the sales data. In a separate system we have the credit management functionality (Financial Supply Chain Mgt - FSCM).
When order is created, the credit limit is checked in the FSCM system (via PI messages).
Now, we want to link some of the Sales orders with Letter of Credit. I believe, this is standard functionality in GTS.
So when Sales Order is created a LOC should be connected to this.
Can the GTS be connected also to FSCM credit management, so credit limit is not affected?
Example:
Sales Order value: 1 Mio USD
10% down-payment > this would be in the credit exposure visible (net exposure).
90 % covered through LOC > credit exposure should showing this, or it shows order value and in a negative figure this amount deducted so no effect on exposure.
Down-payment has no relation to LOC. When money is received for this the net exposure of the sales order is 0.
partial invoice: 0.4 Mio USD > it should be possible to link this invoice to the LOC. The posting FI document should have some LOC information, so when payment comes in the amount in LOC is reduced as well as in credit management this open.
Final invoice 0.5 USD: as above, all values go out from exposure if there are any.
A second case would be guarantees, where there is no reduction of values. This would stay same.
Anyone who can advise a solution here?
Thanks + Regards
Hein

Letter Of Credit can be used as a standard solution of SAP GTS with ERP solution. Yes you can connect both SAP & no SAP systems with GTS, but plugins, PI etc needs to be built in. But it would not be real time like RFC works. There are some standard available which needs to be hard coded to meet specific requirements.
Connecting LOC to Sales Order, invoice etc, is manual, based on business specific parameters and it comes standard with SAP GTS. Maintaining Values & Quantity of LOC based on actual LOC from bank is also possible. The depreciation of values & quantities is also standard with in LOC in GTS.
You can also setup various communication methods for LOC.
I think when Invoice is raised and payment is received the LOC should be closed in the system. There can also be other scenarios where in system determines LOC based on predefined logics for determination strategy put in to the GTS system.
Cheers,
Abir

Tracking of due dates in case of letter of credit and bank guarantee

Hi
In case of letter of credit and bank guarantee can a track be kept in sap for bill negotiated and due (means the vendor has claimed payment but payment from us to our bank is not due) ,
negotiated and due(means our payment is due)
and bills negotiated and overdue (means payment from our side to our bank is overdue)
how is it possible plz explain in detail as i have never worked ob LC and BG.
Thanks in advance.

Hi
Thanks for the answer I will try to explain my requirement .
In case of import and exports Letter of credit and bank guarantee are opened with the bank. There can be amendments also after its creation in terms , amount or validity period. Then it is negotiated and retired.
An example : A letter of credit is opened on 1st Jan. The goods are shipped on 7th Jan .Credit term given by our bank (in case of import) is 1 month which is counted from the shipment date and it expires on 7th feb. The vendor negotiates the bill on 15th jan.
The requirement is to get a report of u2018negotiated and dueu2019 and u2018negotiated and overdueu2019category.
Like from 15th Jan to 7th Feb the bill negotiated by the vendor comes under u2018negotiated and dueu2019 category and after that it comes under u2018negotiated and overdueu2019category.
List of letter of credits established , negotiated , retired and balance if any.
Letter of credit wise u2013 Bank charges paid. i.e at the time of opening , amendment , negotiation and retirement.
Same in case of bank guarantee also.
Plz explain me how can this be tracked and how to configure this.

Credit management activation with letter of credit

Hi Sap guru
I have one queries regarding customer credit limit effect with LC document.
If i creating one LC document for customer after assign to sales order for that perticular customer, it should effect the credit limit of that customer.
In which field it should effect the custmer credit master FD32.
in secured liability field , secured receviable field , or the receviable field .
Can any body tell ,me what is the process of LC attachment with sales order if the credit management is active in company code , and what is the effect in customer credit expouser.
Thanks in advance .
Regards
Anjan Kumar Jha

Hi Anjan
It is the aim of every credit policy to reduce the risk represented by customer receivables.
Along with Credit Management, several other Payment Guarantee Forms within the
business processes are explored. These include letters of credit and payment cards.
These payment guarantee forms differ in the level of security they can offer and are all
integrated within Risk Management.
When a payment guarantee is used (for example, a letter of credit), the system first tries to
provide the optimum in risk minimization. If this is not possible, then Credit Management in
a second step is used to create a credit limit and therefore restrict the level of risk.
Letters of credit are used predominantly for large -scale export transactions, whereas cre dit
while Cards are more important for Retail transactions.
You create a Letter of credit by using VX11 after creating that you assign that in billing tab of sales order in risk Management Financial doc number.
keep in mind the incoterms of Letter of Credit and Sales order should be same.
Reward if helpful
Thanks & Regards
Abhishek Swarup

Total Letter of Credit Process

Hi,
We need to implement Letter of Credit (LC) for one of our client. It is export/import business company.
Can we configure Letter of Credit in Fi or we have to go for another module for LC process.
And our client needs LC number in all the entrie process like LC number in Sales order, delivery note challan etc.
Sateesh

Hi
Thru TC-F-57 we can create letter of credit details as a noted item., which will gnerate a document with single line item.But once your LC is closed i.e payment to vendor is made we need to clear this noted item also.But how to clear pl. explain.
Shivaji

Letter Of Credit ( LC )?

is oracle payable and purchasing support LC? Is not What The Suggetion Work Around Must Go To Implemented?
Thanks

Just to give you an background, A Letter of Credit (LC) is a document issued by your bank that essentially acts as an irrevocable guarantee of payment to a beneficiary. This means that if you do not perform your obligations, your bank pays. The letter of credit can also be the source of repayment of the transaction meaning that the exporter will get paid with the redemption of the letter of credit.
Let me give you an example:
For simplicity sake lets imagine that your company imports Laptop from a Taiwan manufacturer called XYZ Computer, which banks at CitiBank Taiwan. Your company currently banks at OCBC Singapore
For the purpose of this example these will be the roles that the parties will play in the letter of credit transaction:
Your company : applicant
Taiwan manufacturer : beneficiary
OCBC Singapore : Issuing Bank
CitiBank Taiwan : Advising Bank
The example:
You want to buy $50,000 worth of desktop/Laptops from Taiwan Manufacturing, which agrees to gives you 60 days to pay it with the condition that you provide them with a 90 days letter of credit for the full amount. The steps to get the LC would be as follows:
1)You go to OCBC Singapore and request a $50,000 letter of credit with Taiwan Manufacturing as a beneficiary.
2)The bank goes through its underwriting process. Although the bank is not advancing money, they are extending credit on your behalf and are taking on a contingent liability. If your company qualifies from a credit standpoint the LC is issued.
3)Even if your company does not qualify for credit, you can still get an LC if you are willing to put cash collateral CD secured letters of credit are very common for small business specially in APAC region.
4)The bank sends a copy of the letter of credit to OCBC Singapore, which lets the vendor knows and the merchandise is shipped.
Take into consideration that the letter of credit itself might be the source of repayment of the transaction. It could be that Taiwan Manufacturing is interested in getting paid as soon as the stuff is shipped. Therefore, the letter of credit will indicate that payment shall be made as soon as Taiwan Manufacturing can present proof of shipping.

Letter of credit and credit Mgmt

hi experts i am working on this issue please through some light on this please,i am creating LC and when i create sales order i am using this LC document in billing tab financial documents,here my requirement is when customer have LC sales order or delivery should not block for the credit check.How it can be done please let me know.Thanks alot.

A Third party solution provider named Collabera,formerly IVL india Private Limited Trivandrum,
has an addon module for SAP like OptiSuite - Exports,imports,excise,forms etc , handlying Letter of credit seperately.
Check with the google for more details..
Cheers,
Edited by: Mukundan Ramanathan on Feb 10, 2009 7:22 AM

Bank guarantee and Letter of Credit

How does one include Bank guarantee in SAP SD credit check.
What is the difference between bank guarantee and letter or credit?

Dear Ravi
To my knowledge, Bank Guarantee is used only in Imports whereas, L/C is used in both (exports and imports) scenarios. In both the cases, bank stand guarantee for payment to seller.
thanks
G. Lakshmipathi

Letter of Credit Process in SAP

Hi Guru's
Can any one send me or explain me the letter of credit process in SAP or sales cycle?
please send step by step configuration or documentation on the above process.
my mail id is [email protected]
Suitable points will be rewarded.
thanking you in advance for your kind help.
Thanks n Regards
Toshniwal

Hi,
Please find the Letter of credit details
The configuration is as follows - OVFD, Define and assign payment guarantee, OBYN,OBYH, and OBYK. It is properly working.
I made all the required transaction VX11N, VXA2, F-36, F-34, F-20
Letter of Credit: A letter issued by a bank to obtain payment for goods. When a letter of credit is confirmed, the advising bank guarantees payment only if all stipulations in the letter of credit are conformed to exactly.
1.The importer first request a quote for merchandise. This may or may not include transportation and insurance costs.
2.The importer prepares a purchase order based on the offer received from the exporter.
3.The exporter creates a proforma invoice and sends it to importer.
4.The importer opens a letter of credit with the opening bank in the country of import.
5.The opening bank sends the letter of credit to the advising bank in the exporters country.
6.The advising bank advises the exporter that a letter of credit has been opened in his favor.
7.The exporter ships the merchandise in accordance with the terms stipulated in the LOC.
8.The exporter gives the documents proving that the shipment was made in conformance with the LOC to the advising bank.
9.The advising bank pays the exporter based on the documents received.
10.The advising bank transfers the documents to the opening bank and receives payment.
11.The opening bank gives the document to the importer.
12.The importer calculates the duty rates, file the declaration with customs and pays the customs duties within the time frame required by law.
Hope this will be useful
Reward points if helpful to you.
Bye
Anil

Letter of Credit management in SAP Business one

Hi All,
One of our customer wants to manage the "Letter of Credit" used in exporting their product to different countries. They need to record it, discount it from bank, record bank charges and close it when their customer repays the amount. Also need to reconcile it through bank reconciliation. Is there any solution available (as an add-on or work around)?
Thanks and regards
Ajith G.

Hi Peter,
We are using India localization and the Bill of exchange is not available in that. But after reviewing the functionality, we found that it is a very good workaround solution for our customer. Now my question is whether this facility will be added for India localization in the next version of SAP Business One?
In addition to that we are discussing with another prospect who is actually doing cross-border trade. He is satisfied with all other aspects of Business one. Only problem is that he wants to generate all documentations related to his trade to be generated from Business one. Is this possible or any add-on available?
Regards
Ajith G
Edited by: Ajith G on Jun 29, 2009 12:04 PM

Letter of Credit for Imports

Hi All,
How to map letter of credit for import purchase orders in MM module. The foreign Trade part of SD module only talks of export.
Prashant Tawde

Hi Phani
Thank for your help
Please tell me step by step from creating a letter of credit to paying
I have a business below:
1. The Clearing agent ask for amount, the person who receive the product will give Letter of Authority to Clearing Agent. The clearing agent move to bank and take check.
For this purpose, we just issue LA.
2. Prepare Purchase for the Vendor from whom we are going to receive the product. There may be 2 or more Vendors.
1. Product cost to be transferred to Vendor A
2. Freight or Other Charges to Vendor B
3. Customs Duty and Others to Vendor C
3. First We have to pay Customs Duty to Commissioner of Customs after LA issued.
Entry : Customs Clearing a/c   Dr
           Cess on Custom a/c    Dr
           CVD Clearing a/c       Dr
           Cess on CVD a/c       Dr
           Special CVD a/c        Dr
           Vendor C a/c             Cr.
4. Cenvat credit for the product will be taken by person who handling Excise in that company
Entry : Cenvat Clearing a/c Cr.
            RG23A Part II   a/c Dr.
5. Clearing of Cenvat Credit
Entry : Cenvat Clearing a/c Dr.
            CVD clearing a/c    Cr.
            Cess on CVD a/c     Cr.
            Special CVD a/c     Cr.
6. After Bank payment they will transfter to us
Entry : Vendor a/c - Dr.
           Bank   a/c - Cr.
Please tell me how to configure and post accounting entries
Step by step
Thank you very much
Minh

Regarding letter of credit

HI
Can any one say me how to hadle Letter fo Credit in SD.
As my client does not have export scenario i have been said that they are going to have it in domestic sale please provide me the settings and the masters if any has to be updated.
And in what way it has to be handled.
Thanks in advance.
Regards,
indu

HI
Appreciate ur quick response thanks alot..
As u said i have to main in a transaction the informationof LC I have to do some setting anywhere so that it will have a link in the sales order.
Moreover u have been saying that something should be maintained in condition which will get determined could you please be lill alobarate in this.
Sorry for asking all these as i had not worked in LC till date.
Thanks in advance.
INDU

Letter of Credit in Export

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