Hi Shruthi Seth,
For configuration settings of Letter of credit, you have to go through the documentary Payments - Cockpit, where step by step procedure is given on how to configure documentary payments. The link is given below.
http://help.sap.com/saphelp_470/helpdata/en/75/14e208133a11d3952d0000e83dcfd4/frameset.htm
Brief description of LOC:
Letter of Credit: A letter issued by a bank to obtain payment for goods. When a letter of credit is confirmed, the advising bank guarantees payment only if all stipulations in the letter of credit are conformed to exactly.
1.The importer first request a quote for merchandise. This may or may not include transportation and insurance costs.
2.The importer prepares a purchase order based on the offer received from the exporter.
3.The exporter creates a proforma invoice and sends it to importer.
4.The importer opens a letter of credit with the opening bank in the country of import.
5.The opening bank sends the letter of credit to the advising bank in the exporters country.
6.The advising bank advises the exporter that a letter of credit has been opened in his favor.
7.The exporter ships the merchandise in accordance with the terms stipulated in the LOC.
8.The exporter gives the documents proving that the shipment was made in conformance with the LOC to the advising bank.
9.The advising bank pays the exporter based on the documents received.
10.The advising bank transfers the documents to the opening bank and receives payment.
11.The opening bank gives the document to the importer.
12.The importer calculates the duty rates, file the declaration with customs and pays the customs duties within the time frame required by law.
Please Reward If Really Helpful,
Thanks and Regards,
Sateesh.Kandula
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