The importer’s corresponding bank in South Africa then forwards the negotiable documents to the issuing bank overseas. The issuing bank will require the importer to make payment and once this is done they release the documents to the importer. Recall that the issuing bank may not necessarily be the importer’s own bank (referred to as the remitting bank). Thus the importer may need to arrange for the transfer of monies from his own bank (the remitting bank) to the bank he used to facility payment of this order (the issuing bank). The importer then uses the documents to clear the goods through Customs. Depending on the terms of sale, customs clearance, the payment of duties and the delivery of the goods to the importer’s designated premises may be the responsibility of either the importer or the exporter (although it is more common for the importer to take responsibility of this task).

The issuing bank, having received payment from the importer transfer this money to the corresponding banks via SWIFT, T/T, bill of exchange of bank cheque. The local corresponding bank will notify the you that the funds have arrived and you would then indicate into which account these funds need to be paid (normally your firm’s business account which may be held at the same bank or maybe a different bank).