What is a commercial accreditation?
commercial accreditation is used during trade transactions, usually - but not always - between international parties to promise payment for products or services. Like other types of letter of credit, this document explicitly describes how much money will be paid for a product providing a product or service. This letter is created by the customer's bank as a way to pay the second bank to pay the seller. To receive the payment, the seller must show banking documents confirming services, completed or sent; Otherwise, the bank will not publish a payment. With a commercial accreditation letter issuing the bank, the bank replaces the buyer as the recipient; If there are problems with payment, the seller goes to the buyer to the issuing bank. In a commercial credit letter specifies a letter what the buyer accepts, the payment deadline that the bank pays to the seller and how much the services are paid for. The buyer initiates a letter to ensure the seller's payment.
The buyer goes to his bank and asks to create a commercial accreditation. After it is written, the letter is sent to the Seller's bank, known as the Advisory Bank where the letter is authorized. When the letter of the letter is met, the Counseling Bank will release the payment.
commercial accreditation varies from other mostly under payment conditions for sellers. Unlike other letter of credit, the seller must prove that the products have been sent or that the service is completed. If it is not possible to prove, then the Advisory Bank refuses to pay until it is possible. Although this means that the seller will have to wait longer than they receive payment, it protects Bostrans from potential fraud.
When a commercial accreditation is created, the buyer is no longer the recipient and does not have a financial obligation to business transactions; This is because the buyer supplies all the money needed for the letter when it is created. The issuing bank becomes the recipient because the issuing bank has control of money. If the transaction appears with a problemWe, the seller must negotiate directly with the bank, not with the buyer.