The complete life of an import documentary credit as processed by the application: from the customer's request to open a credit, through issuance and amendment, acknowledgement by the advising bank, the full claims chain (document presentation, discrepancy handling, payment requests) and settlement — including what happens to the LC's accounting at every step.
An import letter of credit is the bank's conditional payment undertaking to the beneficiary (the exporter) on behalf of an importing customer. The application models each action on the LC as an event: registration, pre-advise, issue, amendment, acknowledgement, the claims chain and settlement. Every event is captured on a form, passes through a standard maker–checker workflow queue, and — when configured — releases accounting postings, charges and SWIFT messages at approval.
flowchart TD
APP(["Applicant request"]) --> REG["1 · Register (REG)"]
REG --> MASTER(["LC Master hub — lifecycle control"])
MASTER -->|"optional"| PRE["2 · Pre-Advise (PRE) — MT705 out"]
MASTER --> ISS["3 · Issue (ISS) — MT700 out"]
PRE -.->|"proceed to full issue"| ISS
ISS -->|"on approval: accounting initialised"| LIVE(["LC live — advised to beneficiary"])
MASTER -->|"any number of times"| AMD["4 · Amendment (AMD) — MT707 out"]
AMD -->|"amounts recalculated"| LIVE
LIVE -->|"advising bank confirms"| MT730IN["MT730 in"]
MT730IN --> ACK["5 · Acknowledgement (ACK)"]
LIVE --> PBS(["Presenting bank presents documents"])
PBS --> CLMDPE["6a · Document Presentation (CLMDPE)
MT732 / MT752 / MT734 out"]
PBS -->|"MT750 in"| CLMDIS["6b · Discrepancy (CLMDIS)
waive vs refuse"]
CLMDIS -->|"waive"| W752["MT752 out"]
W752 --> CLMREQ["7 · Claim Request (CLMREQ) — MT754 in
MT756 + MT202 out"]
CLMDIS -->|"refuse"| W734["MT734 out"]
W734 --> RET(["Documents returned — no settlement"])
PBS -->|"MT754 in (clean)"| CLMREQ
CLMREQ --> CLMSET["8 · Claim Settlement (CLMSET) — MT756 out"]
CLMSET --> PAID(["Settled — LC drawn down"])
Every event below is pre-configured in the product's event setup and drives which screens, queues and messages are offered to operations staff. Some events are defined but not active today — they are marked accordingly.
| Order | Event | Business stage | Inbound | Outbound | Status |
|---|---|---|---|---|---|
| 1 | REG | Register the LC request | — | — | Active |
| 2 | PRE | Optional pre-advice of terms | — | MT705 | Active |
| 3 | ISS | Formally issue the credit | — | MT700, MT740, MT202 | Active |
| 4 | AMD | Amend terms / amounts | >— | MT707, MT202, MT799 | Active |
| 5 | ACK | Record advising bank's acknowledgement & charges | MT730 | MT202, MT799 | Active |
| 6 | CLMDPE | Advice of document presentation; honour / refusal | — | MT732, MT752, MT734 | Active |
| 6 | CLMDIS | Advice of discrepancy (deep dive) | MT750 | MT734, MT752 | Active |
| 7 | CLMREQ | Presenting bank claims reimbursement | MT754* | MT756, MT202 | Active |
| 8 | CLMSET | Settlement advice with charges | — | MT756 | Active |
Operations staff experienced with one stage will recognise every other stage — the mechanics differ only in the data captured. Three mechanisms apply throughout:
When a form is saved it enters the INPUT queue. Submitting advances the record through its configured queue sequence; a decline sends it back one queue with the reasons recorded. The final approval queue performs all release actions at once — postings, charges, electronic messages, and stage-specific effects on the LC master.
Each event is configured with the tabs it needs. Visible tabs must be complete before submit: every posting and charge line needs an account number, and any mandatory SWIFT message must be generated and saved. Completion is shown with colour badges on the tabs.
Inbound: SWIFT files are read, parsed and stored as raw messages (status Pending → Processed), then routed by type to the matching work screen — MT730, MT750, MT754 for the LC lane.
Outbound: each event's Swift tab builds the message from captured data, offers a validation preview, and stores it (status Generated → Released on approval).
Everything the stage sections describe as per event configuration is defined once, up front, on the Product Configuration screen. One Product record owns the Import LC setup (product code ILC): identity fields and the LC Configuration block on Main Details, plus setup tabs that feed the queues, charges, SWIFT messages, checklists and postings each event uses.
| Configuration | What it controls | Where it takes effect |
|---|---|---|
| Main Details — LC Configuration | ||
| LC Pre-Advice Enabled | Whether Stage 2 (PRE) is offered | Registration form flag |
| Allow Partial Drawings | Whether multiple presentations against one LC are permitted | CLMDPE / CLMREQ amount guards |
| Default Tolerance % | Default plus/minus for 39A when not overridden | Issue / Amendment forms |
| Confirmation Default | CONFIRM / MAY ADD / NO CONFIRMATION | Issue form field 49 |
| Reimbursement Bank Required | Whether MT740 generation is mandatory at Issue | Issue form field 53a |
| Event Setup (per event: REG, PRE, ISS, AMD, ACK, CLMDPE, CLMDIS, CLMREQ, CLMSET) | ||
| Queues | Input → Update → Approval → Cancellation sequence | Workflow engine |
| Release Tabs | Which of Posting / Charges / Swift / Advice / Settlement are visible | Form tabs |
| SWIFT Messages | Outbound message types, mandatory/optional flags | Swift tab generation |
| Charges | Charge codes, who pays (applicant/beneficiary), charge accounts | Charges tab |
| Postings | Accounting leg templates (DR/CR accounts, narration) | Posting tab |
| Checklists | Field-level validation rules, mandatory items | Form validation |
| Rules & Charges | ||
| Charge codes & rates | Commission, advising, amendment, cable, handling fees | Charges tab; auto-calc on amount |
| Tolerance validation | Plus/minus bounds, override rules | Issue / Amendment validation |
| Date rules | Issue ≤ expiry; shipment ≤ expiry; presentation period vs 48 | Form validation |
| Accounting Model | ||
| Liability posting template | DR Liability / CR Nostro (or Applicant) | Issue approval |
| Utilisation posting template | DR Nostro / CR Liability (or Applicant) | Claim settlement approval |
| Charge posting template | DR Applicant / CR Income (per charge code) | Charge reconciliation |