A Documentary Letter of Credit usually includes instructions from the importer with conditions under which he/she is willing to pay the exporter. The conditions include description of goods, quantity and other documentary requirements. After all details about the product, transportation and involved costs have been clarified, the Documentary LC is issued to the exporter and the respective bank. After confirmation, the exporter ensures that goods are ready for shipment. Once the shipment has been completed, the exporter presents all the documents, including a Bill of Lading
, to the bank for payment. While banks do not track the movement of goods, they verify the documents for authenticity. Once the bank is certain that all conditions have been met, the exporter receives the agreed payment from the bank. Once the funds have been received, the issuing bank shares the Bill of Lading with the importer so the shipment can be released.