Key tasks: Letter of credit for the export of goods

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Important

This content is archived and is not being updated. For the latest documentation, see Microsoft Dynamics 365 product documentation. For the latest release plans, see Dynamics 365 and Microsoft Power Platform release plans.

Applies To: Microsoft Dynamics AX 2012 R3, Microsoft Dynamics AX 2012 R2, Microsoft Dynamics AX 2012 Feature Pack, Microsoft Dynamics AX 2012

You can use letters of credit in the Accounts payable, Accounts receivable, and Cash and bank management modules to set up and transact bank-operated guarantees of payment between vendors and buyers that conduct business across international borders.

This key task topic describes how to work with letters of credit for export transactions, from the required setup to recording the payment and closing the letter of credit. For a detailed description of how to work with letters of credit for import transactions, including import collections, see Key tasks: Letter of credit or import collection for the import of items.

After the international parties and their banks reach an agreement to process an export transaction by using a letter of credit, you can create a sales order for the letter of credit. In the sales order, you can specify and amend the letter of credit details that you receive from the buyer and advising bank. After you dispatch the shipment, you can record a packing slip that indicates that the materials were dispatched according to the letter of credit agreement. Finally, you can post the invoice, receive payment for the invoice, and settle the transactions for the letter of credit.

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Activate export letters of credit

Set up customer bank accounts

Create a letter of credit sales order

Enter letter of credit details

Amend letter of credit details

Issue the bank document and post the packing slip

Invoice the sales order and mark the documents as submitted

Record the payment for the letter of credit invoice

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About letters of credit and import collections

Activate export letters of credit

You must activate the letter of credit as a bank document before you can initiate transactions that involve the letter of credit.

  1. Click General ledger > Setup > General ledger parameters.

  2. Click the Ledger link, and then click the Bank document FastTab.

  3. Select the Enable export letter of credit check box to activate the letter of credit.

  4. Close the form to save your changes.

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Set up customer bank accounts

Customer bank accounts must be specified for letter of credit transactions to be recorded correctly.

  1. Click Accounts receivable > Common > Customers > All customers.

  2. Select a customer, and then on the Customer tab, in the Set up group, click Bank accounts.

  3. In the Customer bank accounts form, enter the appropriate information in the Bank account field, the Bank account number field, and other fields.

  4. Close the form to save your changes.

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Create a letter of credit sales order

You can create a sales order to associate with the letter of credit request.

  1. Click Sales and marketing > Common > Sales orders > All sales orders.

  2. Click Sales order to create a new sales order.

  3. In the Create sales order form, in the Customer account field, select the customer account.

  4. Click the General FastTab.

  5. In the Bank document type field, select Letter of credit, and then click OK.

  6. Add lines and items to your sales order.

  7. Close the form to save your changes.

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Enter letter of credit details

After you have created a letter of credit sales order, you can enter the specific details related to the letter of credit.

  1. Click Cash and bank management > Common > Letters of credit > Export letter of credit/import collection. Double-click the letter of credit that you want to amend.

    –or–

    Click Sales and marketing > Common > Sales orders > All sales orders. Click the Manage tab, and then click Letter of credit. For more information, see Export letter of credit/import collection (form).

  2. In the Bank document number field, enter the document number specified by the bank.

  3. Click the Bank details FastTab, and then in the Bank document number field, select the bank that issued the letter of credit.

  4. In the Advising bank field, select the advising bank.

  5. Click the Bank document FastTab, and then in the Documentary credit type and Documentary credit nature informational fields, select the appropriate values, if required. The documentary credit type can be Irrevocable or Revocable. The documentary credit nature can be Non transferable, Transferable, or Revolving.

  6. In the Expiration date field, enter an expiration date for the letter of credit sales order.

    You can also enter information about tolerance and maturity on this FastTab.

  7. Click the Lines FastTab, and then click Add line to add shipment details. In the Amount, Actual maturity date, and Documents submitted fields, enter the necessary values.

    Note

    You can click Fetch sales order shipments to display the shipment details that are already specified in the sales order lines or delivery schedule.

  8. Click the Terms FastTab, and then specify the shipment terms and payment terms for the letter of credit.

    Note

    You can click Print details to print the letter of credit details. You can click Attachments to attach a document or file to the letter of credit record.

  9. Close the form to save your changes.

    Note

    You must confirm the sales order before you continue. Click Sales and marketing > Common > Sales orders > All sales orders. On the Sell tab, in the Generate area, click Sales order confirmation, and then click OK in the Confirm sales order window.

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Amend letter of credit details

If the sales order details change, you must update the letter of credit details before you submit an invoice. You can modify a confirmed letter of credit only when the letter of credit is in the Open status. The bank may charge a fee for amending an existing letter of credit.

  1. Click Cash and bank management > Common > Letters of credit > Export letter of credit/import collection. Double-click the letter of credit that you want to amend.

    –or–

    Click Sales and marketing > Common > Sales orders > All sales orders. Click the Manage tab, and then click Letter of credit.

  2. Click Edit, and then make changes to the letter of credit details. You can change the letter of credit amount or number of shipments, if required.

    Note

    You can modify the shipment details only if the packing slip or invoice has not been posted against that shipment.

  3. In the Amendment number field, enter a value to indicate how many times the sales order has been amended.

  4. Close the form to save your changes.

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Issue the bank document and post the packing slip

After you have amended your letter of credit transaction information, you can issue the bank document and post the packing slip. When you post a packing slip, you can specify the shipment number to map the shipment with the delivery. You cannot update a packing slip unless the letter of credit amount is equal to the sales order amount.

  1. Click Cash and bank management > Common > Letters of credit > Export letter of credit/import collection. Double-click the letter of credit that you want to issue.

    –or–

    Click Sales and marketing > Common > Sales orders > All sales orders. Click the Manage tab, and then click Letter of credit.

  2. Click Issue bank document to issue the letter of credit.

  3. In the Sales order form, select the line for your letter of credit sales order, click the Pick and pack tab, and then click Picking list.

  4. Click OK to post the picking list.

  5. Click Packing slip.

  6. Click the Overview FastTab, and then in the Shipment number field, select a shipment number.

  7. Click the Parameters tab, and then in the Quantity field, select All.

  8. Select the Print packing slip check box, and then click OK to post the packing slip.

  9. Close the form to save your changes.

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Invoice the sales order and mark the documents as submitted

After the packing slip is posted, you can register an invoice for the sales order. You cannot post the invoice unless the letter of credit amount is equal to the sales order amount.

  1. Click Sales and marketing > Common > Sales orders > All sales orders.

  2. Select the appropriate record, and then click the Invoice tab.

  3. In the Generate area, click Invoice.

  4. Click the Overview FastTab, and then in the Shipment number field, select a shipment number.

  5. Click the Parameters tab, and then in the Quantity field, select All.

  6. Select the Print invoice check box, and then click OK to post the invoice.

  7. Click Cash and bank management > Common > Letters of credit > Export letter of credit/import collection. Double-click the letter of credit that you want to amend.

    –or–

    Click Sales and marketing > Common > Sales orders > All sales orders. Click the Manage tab, and then click Letter of credit.

  8. On the Lines FastTab, change the value in the Documents submitted column to Yes for each line item.

  9. Close the form to save your changes.

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Record the payment for the letter of credit invoice

After the sales order is invoiced and the documents are marked as submitted, you can receive the payment from the customer and settle the accounts. For more information, see Receive and enter customer payments.

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Export letter of credit/import collection (form)

Key tasks: Letter of credit or import collection for the import of items