Buyer/Seller - Details

    Reimbursement Finance

    Reimbursement finance is funding provided by banks other than the letter of credit issuer and supplier (LC).

    As soon as the shipment is completed, the supplier's bank sends all required documentation to the LC issuing bank and requests payment from the reimbursed bank. After receiving reimbursement authorization from the LC issuer, the reimbursing bank pays the supplier's account. On maturity, the importer pays the local bank, which pays the reimbursement bank.



    How Does it Works


    1. According to the supplier's contract, the importer asks for a price from the Trade Finance Consultant.
    2. Indicative pricing from an overseas bank is quoted to the importer.
    3. If the importer accepts the pricing, the reimbursing bank sends a confirmation/offer letter to proceed.
    4. Following receipt of relevant documentation by the local bank, LC is issued straight to the supplier's bank with terms and conditions set by the reimbursement bank. The local bank will email or fax the LC to the reimbursed bank.
    5. The supplier ships the products and provides documentation to the supplier's bank.
    6. The supplier's bank forwards the document.
    7. The LC issuing bank checks for LC terms and UCP 600 compliance. And send acceptance to the supplier's bank if compliant.
    8. LC opening bank will transmit the Reimbursing bank MT740, authorizing to make payment to the supplier's bank for the principal amount and reimbursement charges** on maturity. Some reimbursement banks also require digitized/scanned documents and/or MT799s (buyers credit like LOU format).
    9. The supplier's bank will issue a reimbursement claim through MT742 to the reimbursing bank after the LC is accepted.
    10. Reimbursing bank pays supplier's bank using MT740 and MT742.
    11. It will send advice under MT799 (Interest + other costs) to the LC issuer.
    12. The issuing bank pays the reimbursing bank at maturity.