Letter of Credit

The following sequence diagram illustrates the step-by-step process of an LC transaction, depicting the interactions between the buyer, seller, issuing and advising banks, and shipping entities from the initial contract agreement to the final delivery of goods at the buyer's local port.

sequenceDiagram
    accTitle: Letter of Credit
    accDescr: The sequence diagram illustrates the step-by-step process of an LC transaction.
    autonumber
    participant Local Port of Buyer
    actor Buyer
    participant Issuing Bank
    participant Advising Bank
    actor Seller
    participant Ship
    Buyer-->Seller: Agrees to a Contract of Sale
    Seller->>Buyer: Pro Forma Invoice
    Seller->>Buyer: Final Pro Forma Invoice
    Buyer->>Issuing Bank: Application To Open LC
    Note over Issuing Bank, Buyer: Grants the Application
    Buyer->>Issuing Bank: Makes Payment
    Note over Issuing Bank: Issues an LC
    Issuing Bank->>Advising Bank: Send the LC
    Advising Bank->>Seller: Notifies About the LC
    Seller->>Ship: Goods
    Ship->>Seller: B/L
    Ship->>Local Port of Buyer: Ships Goods
    Seller->>Advising Bank: B/L &<br>Other Documents
    Note over Advising Bank: Checks B/L Specification &<br>LC Specification
    Advising Bank->>Issuing Bank: Forwards B/L & Documents
    Advising Bank->>Seller: Pays Money
    Issuing Bank->>Advising Bank: Pays Money
    Issuing Bank->>Buyer: Forward B/L &<br>Other Documents
    Buyer->>Local Port of Buyer: Shows B/L
    Note over Local Port of Buyer: Checks B/L
    Local Port of Buyer->>Buyer: Provide Goods