Flow Chart of L/C Opening in Garments Merchandising

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Letter of Credit (L/C): 

L/C means Letter of Credit. It is a familiar word in the apparel industry. L/C set up is the work of the merchandising section in a garment factory. A merchandiser should have a clear concept of the letter of credit. Letter of Credit (L/C) also known as Documentary Credit is a widely used term to make payment secure in domestic and international trade. So, L/C is very important in apparel merchandising. Novice garment merchandiser doesn’t know how to L/C open. Now, I am giving a flowchart of L/C opening in garments merchandising.

L/C Opening in Garments
Sample Letter of Credit

Flow Chart of L/C Opening in Garments Merchandising

The requirement of material with specification
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To inform about the requirement to the head of the management
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Management will search for the requirement
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Various company respond with those specifications 
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The management will select some offers
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Then the discussion will be held among two management
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Management will sign the agreement with the selected company or agencies
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Then negotiation will take place among management and agencies
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Submission of the final PI
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Bank will open L/C

LC is one of the most used words in the apparel merchandising world. A merchandiser should have a clear concept of a letter of credit. The phrase “letter of credit” derives from the French word “accréditation,” which means a power to do something, which in turn derives from the Latin word “accreditors,” which means trust.
Letter of credit is a written promise to pay seller/exporter for goods and/or services, by a buyer’s/importer’s bank (called the issuing bank) to the seller’s/exporter’s bank (called the accepting bank, negotiating bank, or paying bank). Related documents should presente to the bank for payment. The documents prove that the seller has performed his duties as per the standard and quality of goods/service mentioned in the sales contract/proforma invoice that was agreed and signed by both of the parties before issuing a letter of credit.
Author of this Article:
Noor Ahmed Raaz
Asst. Merchandiser
A.M.C.S Textile Ltd
Email: [email protected]

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