As an American shipping from Thailand to a customer in the US who presents a letter of credit, should one have the L/C made out to a thai bank or to one's local bank back home? I can't imagine the average thai bank has any experience with a L/C so having it issued to a US bank would seem the better choice. At the same time, without myself being in the US, I don't know if I would run into complications. A bit of a specific topic, but if anyone has experience in this area, I would be interested to hear your experiences.

A letter of credit is normally irrevocable, so as long as both parties agree the terms of the l/c and the bank/s are reputable then it should make no difference if the banks are Thai or US. The cash of the payee is tied up until the l/c is settled.

I do not understand why you should have any reservations unless you are dealing with an unreputable bank.

When you Export Goods - you will need to show that Funds have come to Thailand to pay for them, not to have gone to your Local Bank back home.

So the L/C should be opened on a Bank in Thailand

- but there are American Banks here if you prefer them.

ROGER13

When you Export Goods - you will need to show that Funds have come to Thailand to pay for them, not to have gone to your Local Bank back home.

PNUSTEDT

A letter of credit is normally irrevocable, so as long as both parties agree the terms of the l/c and the bank/s are reputable then it should make no difference if the banks are Thai or US. The cash of the payee is tied up until the l/c is settled.

Thanks for the responses. It seems like two different things are being said here. Have both of you dealt with Letter's of Credit before? Roger13, I would prefer to keep it all at my local branch back in the US and simply have the money wired here by them. In this way, i would have evidence via the wire transfer. Would this be suitable to show the customer that the funds have gone to Thailand or must  the letter of credit always be made out to a bank in the country where the product will be shipped from?

I'm not currently in BKK and I can forsee a number of complications with the language barrier and what not should I walk into my local Bangkok Bank branch. I haven't dealt with a L/C before so maybe I'm imagining problems that don't exist, but I'd like to feel somewhat knowledgable before I discuss it with the customer. Thanks for any advice you may be able to offer.

ChiangMaiThai

I am only familiar with L/C opened in the

Country of Export.

You might not be familair with L/C but your Bank should be dealing with many everyday - I suggest you ask them.

If it is a small branch - export documents may be Centralised

in a bigger branch - but your Branch Manager should be

capable of speaking English and staff should refer any problem to him/her to help you.

You wrote:

"Would this be suitable to show the customer that the funds have gone to Thailand"

If you mean "Customs"? - sorry I do not know the answer.

Roger

Okay, thanks for the input Roger. I'll speak with the branch manager at my local bank here and see what I can find.

The L/C is the process of how the producer/supplier can be sure of getting paid. The customer will not be able to open an L/C unless he has the funds or credit to action it. Those funds would then be tied up until the L/C is actioned.

Customs will be more interested in the "bill of lading" which will itemise all items being shipped, how they are being shipped, and their value.

Normally your L/C will be actionable from the BOL, e.g. "payment due 30 days from BOL" - so the customer's bank will require a copy of the BOL.

I export from HK to all parts of the world - many of the transactions are by L/C (particularly new customers) - never had a problem with one. However, there are some occasions when the terms of the L/C need to be varied (e.g. if a shipping date is specified on the L/C and you ship late), both parties need to agree any amendments.

Hi pnustedt.

In your experience, can you the supplier choose any bank you wish for the LC to be made to? Or have you always had it made to a HK bank? If I understand an L/C correctly, you shoudl be able to have it made to any bank in the world because you're only getting paid when you have met the obligations set by the buyer. So I don't see why the buyer would care where the money went, as long as you meet your obligations and the product is shipped in good condition. Thanks.

Yes, it should not concern the customer which bank you (as the supplier) use.

My company have several accounts with different banks - the which one we use may depend on the currency we are being paid in. We would have a US$ a/c with bank a, perhaps an AUS$ a/c with bank b.

You would need to notify the supplier of your bank details (and bank speed, or "Swift" No. if they have one, check with your bank mgr - that speeds up the transfer).

pnustedt

What ChiangMaiThai wants to know

and I also would be interested in the Answer

He is exporting from Thailand To USA

He would like the Importer in the USA to open an L/C

addressed to ChiangMaiThai's Bank in USA

I can see that this could be possible

and satisfies security of payment etc

what I consider in doubt is whether it would satisfy

Thailand's Export requirements to show that

Thailand has received Foreign Exchange for the Export

He says he will subsequently send the Funds from

USA to Thailand as a personal remittance.

Do you know if this will be acceptable

or will it cause problems?

Thailand's Export requirements to show that

Thailand has received Foreign Exchange

I am not aware of such requirements. I am not an expert on Thai export regulations but I don't see how such a regulation could be enforcable. The L/C may be actionable months after the goods have been exported.

Thailand's Export requirements to show that

Thailand has received Foreign Exchange for the Export

Roger, can you elaborate on this? Thanks.