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SAP Risk Management - Letter of Credit (New) ( RELN/SAPSLL/CORE_LOC )

SAP Risk Management - Letter of Credit (New) ( RELN/SAPSLL/CORE_LOC )

CL_GUI_FRONTEND_SERVICES - Frontend Services   CPI1466 during Backup  
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SAP Risk Management - Letter of Credit (New)

Use

As of SAP GTS 7.0, you can use the new 'Letter of Credit' service to mitigate financial risks in global trading. You can incorporate this new service in your import and export transactions to minimize risks and expedite transactions in international trade. It allows you to gain more control over shipping dates and receipt of documents for legal control purposes. The following functions are available in the new service:

  • You can maintain letters of credit that you receive from banks in the letter of credit master data
  • Inbound and outbound logistics integration allows you to assign letters of credit to import and export transaction documents
  • You can monitor the status of the letters of credit in the system
  • You can print documents in a manner that complies with the stipulations in a letter of credit.

Import

  1. As an importer, you request a quotation from the exporter for the goods you want to purchase.
  2. Once you receive the quotation, you create a purchase order.
  3. The exporter creates a pro forma invoice and sends it to you.
  4. You open a letter of credit with the opening bank in the country of destination (import country). This involves informing the opening bank of the documents you require from the exporter. As an importer, you not only need the documents required by customs, but also the documents that are required by any other agencies regulating your commodity. These may include, for example, bills of lading, a Single Administrative Document (EU only), or a Shipper's Export Declaration (U.S. only).
  5. You create a letter of credit in SAP GTS.

You can use import letters of credit to provide your suppliers with your bank's undertaking that they will receive payment upon delivery of those documents specified in the letter of credit within a stipulated time. To you, as an importer, using a letter of credit reduces the risk of having to pay in advance for goods or pay for any goods or services that are not consistent with the product descriptions in the letter of credit.

With letters of credit, the supplier does not need to ask for shipments to be secured by cash in advance and you may obtain better pricing if your supplier is assured of a letter of credit.

Export

  1. As an exporter, you create a sales order when you receive a purchase order from the importer, and you send this together with a pro forma invoice to the importer.
  2. The opening bank sends the letter of credit to the advising bank in the country of departure (export country).
  3. The advising bank advises you that a letter of credit has been opened in your favor.
  4. You ship the goods in accordance with the terms stipulated in the letter of credit.
  5. You provide the advising bank with the documents that prove you shipped the goods in accordance with the letter of credit.
  6. The advising bank pays you based on the documents it receives.
  7. The advising bank transfers the documents to the opening bank, and receives payment from the opening bank.
  8. The opening bank provides the importer with the documents you sent.
  9. The importer calculates the duty rates, files a customs declaration, and pays the customs import duties within the legally required timeframe.
  10. You file an export customs declaration with the responsible authorities.

The export letter of credit provides you with a guarantee that you will be paid, provided you ship the goods and present the documents specified in the letter of credit within a stipulated time. This reduces any payment risk to you, the exporter. It also enables you as an exporter to request immediate payment under letter of credit drawings (provided that the documents are in order), thereby improving your cash flow.

The following features are available as of SAP GTS 7.0 to minimize risk in import and export transactions:

  • You can create the following types of letter of credit:
  • Revocable

  • Irrevocable unconfirmed

  • Irrevocable confirmed

  • You can create bank master data by transferring the data initially from your feeder system to SAP GTS and enhancing it in the business partner maintenance transaction.
  • You can enter all the relevant shipping and document dates in the header data of the letter of credit. You also enter internal and external letter of credit numbers, Incoterms, company codes including addresses, and administrative data. The item data includes status data, business partner data, values, and bank data.
  • The system recognizes that your import or export business partner is relevant to the 'Letter of Credit' service and you are required to assign a letter of credit to that business partner.
  • You can monitor the status of your letters of credit by displaying the following:
  • Existing letters of credit

  • Assigned letters of credit

  • Blocked documents

  • One user reviews the letter of credit and a second user is required to activate the letter of credit.

Effects on Existing Data

Effects on Data Transfer

Effects on System Administration

Effects on Customizing

Further Information






General Data in Customer Master   PERFORM Short Reference  
This documentation is copyright by SAP AG.

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