Beneficiary

Beneficiary: In foreign trade, the beneficiary usually refers to the party entitled to receive payment under a letter of credit (L/C), typically the exporter or seller. In L/C transactions, the issuing bank, at the request of the applicant (importer), issues a letter of credit and undertakes to pay the beneficiary when the beneficiary submits documents complying with the terms of the L/C. Therefore, the beneficiary is the payee under the letter of credit and also the party submitting the documents. Use scenarios include: after receiving the letter of credit, the exporter prepares the goods according to the L/C, prepares the documents, and presents the documents to the bank within the prescribed period to claim payment. Points to note: the beneficiary must strictly review the terms of the letter of credit to ensure that it can meet all requirements (such as shipment date, types of documents, amount, etc.); otherwise, payment may be refused due to discrepancies between the documents and the L/C. In addition, the beneficiary should pay attention to the irrevocability of the L/C, whether it is confirmed, and the creditworthiness of the issuing bank. Differences from other terms: the beneficiary is different from the remitter/payee in remittance methods, and also different from the principal in collection. In a transferable letter of credit, the beneficiary may also transfer the rights under the L/C to a second beneficiary.