Hi everybody,

We are using letters of credit a lot in our business ….
Assuming that we are importer, we do the following steps .

1-when the bank agrees to open the L/C we put a percentage in the bank as a cover.
Dr . L/C No#### xxxx
Cr. Bank xxxx

Here we debited the L/C account(which is only one account) but we have to enter the L/C number.

2 – This step happens when some one –say a broker for example- do business related for the L/C instead of us (we will pay him later)
Dr. L/C No#### xxxx
Cr. (ledger account or control account in case of BP) xxxx

3- The third step is done when there is some costs related to that L/C
Dr. L/C No### xxxx
Cr. Cost 1 xxxx
Cr. Cost 2 xxxx

4- Here we pay the remaining amount to the Bank the same as Step 1
5- When we receive the goods.
Dr. Inventory xxxx
Cr. L/C No### xxxx

Now the L/C should have a balance of Zero amount and the Inventory have a value equals to all the amounts related to that L/C.

For any time at the steps above we may need to know how much paid and for what purpose for a specific L/C, also note that the amount paid to the Bank is in foreign currency while costs are in local currency and that the currency rate may vary between these transactions.

Last point is that if we are going to make a purchase order we have to made it to a BP where in finance we have no relation with BP (we can deal with it as an interim account but it must be closed).

After this Long Long story , How can we make this in Baan V…
All ideas are appreciated, even it is not fulfill the whole story.

Thanks in advance.

Hi,
Acctually there is no std funct.in baan (as long as i knew) to handle L/C transaction.But my previous company and our implentation project have some working around to handled and it's working.Basically the process as follow:
1.Create any PO for any BP as usual.
2.If there is some costs to included on the inventory valuation then make as a item surcharge.
3.When bank accept the l/c, recorded on journal voucher transaction as:Prepaid L/C account (Dr) and Bank L/C Payable account (Cr).
4.make receipt,matching and approving the PO as ussual.
5.Create and use one transaction type with cash categories to reverse transaction no.3 and 4, using journal and payment transactions.

Hopefully this will help you.
Regards

Thanks for your replay,
although you solution is more easier than we used to do, we can't apply it because of our needs which is more than already offered.

About the surcharges, it is differ from time to time although the item is the same, also financial people will know these surcharges after the wherehousing people receive the goods.(I know that we can't add surchagres after receipt -may be I am wrong) and please note that the PO is in foreign currency and we need surcharges in home currency (by the way can we do that in normal cases :confused: ).

Hi,
What you mean by "our needs more than offered"?

In my previous explanation the L/C amount must coming from PO amount, that's why transactions n.5 created, it's only for reversing and the balance should be zero.

Yup,surcharges for one item always differ from time to time, but in baan 5 we can set as a percentage too. The trigerring for item surcharges is not only coming from receipt transaction but from issue transaction also.
All of foreign currency transaction will be translated into home currency, so why you have to be confused?
Regards

Hi,

your solution is great for the financial books, but may I wasn't clear about what I said, we need a method to get as much information for a speific L/C, not only the total of the account "prepaid L/C"

for the surcharges we paid it in local currency, and we don't kow the equivelent of the foriegn currency, also we mostly don't know all the surcharges till we aready receive the goods.

Thanks for help .