Advising Charges

Advising Charges are a bank fee in letter of credit (L/C) transactions, referring to the service fee charged by a bank other than the issuing bank (the advising bank) for verifying the apparent authenticity of the L/C upon receipt and notifying the beneficiary. This fee is usually borne by the beneficiary, but may also be paid by the applicant according to the L/C terms or the agreement between the buyer and seller. It is mainly used in L/C settlement, especially in cross-border trade, where the advising bank plays a key role as an intermediary bank. Notes: 1. Advising charges are not negotiation charges or confirmation charges; they only cover the advising service. 2. If the L/C requires the advising bank to confirm, a separate confirmation charge applies. 3. The beneficiary should confirm which party bears the charges before presenting documents to avoid extra costs. 4. Banks vary greatly in their charging standards, usually a fixed amount or a percentage of the L/C amount. Difference from other terms: Advising charges differ from negotiation charges, payment charges, and reimbursement charges; they relate only to the advising stage of the L/C. Foreign trade practitioners should specify the allocation of charges in the contract and include clauses such as 'All banking charges outside issuing bank are for beneficiary's account' in the L/C to reduce disputes.