Introduction to Documentary Credits
Learning Objectives
By the end of this letter of credit course you will be able to:
Explain the needs of importers and exporters and how a documentary credit (DC) helps meet them.
Describe the UCP 600, MT 700 SWIFT messages, and the ICC Incoterms® rules.
Describe different types of DCs, including confirmed, transferable, red clauses, back-to-back and revolving.
Describe the document preparation, discrepancies, and drawing of a DC.
Describe the 5 types of risks for documentary credits.
Differentiate between open account terms and cash in advance.
Explain the reasons to issue a Documentary Credit.
Describe the differences between a basic, unconfirmed LC, and a Sight LC.
Understand the SWIFT/ICC “bank payment obligation” (BPO).
Describe the negotiation, financing and settlement of a DC.
Understand how DCs can improve the credit quality of a transaction.
Understand how fraud can play a role in DCs.
Course curriculum
Lessons
In the first lesson of this letter of credit course, we will look closely at the key complexities in international trade and the importance of the documentary credit (DC) in addressing these issues.
In this lesson, we will explore important aspects of the DC including the UCP600 rules, MT700 messages, and the various payment options.
At the end of this lesson, you will be able to describe the basic transaction flow of a DC including the overall application process and the important activities you should keep in mind throughout the process.
In this lesson, we will cover the five types of risk for documentary credits and discover how flexible DCs are in transferring risk from one party to another.
In this lesson, we will learn more about confirmed documentary credits – when an exporter arranges for the addition of a separate and independent payment undertaking from that provided by the issuing bank.
In this lesson, we will see how the documentary credit process has evolved. We will look at how the manual process for application has been progressively replaced with an online infrastructure that links bank trade-processing systems.
In this lesson we will review the regulatory demands and requirements related to trade finance.
This section will test your knowledge on what you have learned so far and aims to equip you with the skills and context you will need in the field. Please note, this is not an exam.
FAQs
Answers to your most commonly asked questions.
This course forms part of the curriculum for the Global Trade Certificate (GTC) but can also be purchased on its own.
If you just complete this course then you will earn a Letter of Completion once you finish (please note there is no exam for this individual course).
However, this course can also be put towards achieving the GTC qualification. More details can be found here.
If you complete the GTC then you will earn a Certificate of Achievement, signed by the ICC Secretary General, once you pass the final exam.
A strong interest in trade and trade finance is recommended and all candidates need to be able to read and write in English.
Your purchase includes 12 months to access all the lessons. You can access the lessons as many times as you like within the 12-month access period.
This course is accredited by the London Institute of Banking and Finance (LIBF), The Bankers Association for Finance and Trade (BAFT) and the Global Trade Professionals Alliance (GTPA).
Due to the immediate availability of our course content upon registration, ICC Academy has a strict no-refund policy for our courses and certifications. For more details, please refer to our Terms and Conditions.
This online course will take approximately 3-4 hours to complete depending on your level of experience.
Candidates will have 12 months to complete the lessons.
- One-year access to the online course and all 8 lessons
- 26 assessment questions – we’ll show you how to apply what you learn to real-world scenarios. Please note this is not an exam.
- 18 animated explainer videos and 1 video lecture
- A printable glossary containing all the key terms for you to refer to throughout the course
- A downloadable study reference guide
- Dedicated, full-time IT support
Yes, all our courses are taken online. This means they are accessible at any time, from anywhere in the world. Learn when and where you want.
This course has been designed for general practitioners working in banks, corporates, or financial institutions in functions such as relationship management, credit and compliance, but with an interest in trade finance.
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