A Letter of Credit is a payment instrument where the seller of the good or service turns out to be the beneficiary of a payment at the request of the buyer who wants to acquire it, being the AURIcoin platform where through the Blockchain technology, the intelligent contract performs this action, ordered and conditioned only between the agreement reached by the seller and the buyer.
The reason why these are very important is because each entity, each country and each person are different and factors such as laws and distance make this a very convenient option since it guarantees payment in any circumstance.
There is simply a compromise where intermediation, risks are eliminated and time and costs are minimized.
Types of credit letters found on the platform, based on intelligent contracts, issued through the Blockchain technology:
In this case payments can only be made to the beneficiaries named in the document and cannot involve third parties, either people or other institutions.
These letters cannot be revoked without the consent of the sellers by any party. In this case, payments can only be made to the beneficiaries named in the document and cannot involve third parties, either people or other institutions.
This can be revoked without prior notice by the buyer. Because it was a prior agreement in the contract between the seller and the buyer.
This allows the beneficiary to assign all of the available credit to someone else so a second beneficiary is created and the contract then refers to the person concerned as the first beneficiary.
It is a more flexible option for both the buyer and the seller, since it ensures that the payment is made despite the occurrence of some kind of unforeseen event. Once the beneficiary verifies that it was not fulfilled, it becomes effective.
They are used when you plan to make several payments or businesses continuously, but taking into account that when the conditions are established, the time periods that the people involved have to consider are also made.
In this case payments are made just after submitting the relevant documentation and normally within a period of no more than 12 hours.
Two letters are involved where the first establishes a second one, where the buyer presents the second credit contract and which was also requested by the instructions of the person who requested the first loan.
They carry this name because they are usually shown with this color in the document to make it clear that an advance in the commitment is requested. The favored persons can receive funds or merchandise from before, as long as it is marked in the red clause. What is received as an advance is deducted at the end of the total credit.
In this case, despite presenting the documents proving payment, this is not done immediately and you have to wait for a period established from the beginning in the contract.
Also calls commercials are used for compliance with international treaties. In this sense, if the exporter issues the letter, it is an export and if the exporter sends it, it is an import.
The blockchain boom is based in part on the use of smart contracts and IoT (Internet of Things).
Smart Contracts do not require human intervention or interpretation to take place. They can be performed automatically when running a computer program. One of these applications are autonomous agents, computer programs created for a specific task.
In this case it would be a task prior to the shipment of the merchandise, be it through land, air or sea, being connected to the Internet, "speaking" through language M2M (machine to machine) with other devices, and would request an order opening of the state of the negotiated property. The system would be able, once the production of the good or raw material was reviewed, the anomaly, if any, would assess the urgency of the availability of the merchandise or raw material, the existence of the merchandise in storage (among other variables), prioritize the queue of tasks and assign appointment before or after to proceed with the dispatch of the same.
So far, no human communication has been produced. Once the system sends the merchandise or raw material, the notice of shipment with date and time is issued, when the acquired good is loaded, it will be shown, for example, through a notification on the dashboard or by a message in your smartphone
The seller would leave the merchandise in the hands of the shipping company. Once the shipping company takes charge of the acquired good, a connection between machines is produced and the resulting order of work "in the cloud" is generated. This automatically arrives to the device that the transporting company has assigned and begins the transportation itself.
Then the system will notify the buyer in what state is your order, when you issue the BL, which will be issued online, and through blockchain could make the payment immediately, with cryptocurrency (digital exchange medium).
In conclusion, these are the benefits of blockchain and smart contracts in the issuance of letters of credit that can be used on the RexMilia platform.
• Transparency: At all times we know the status of the acquired good, before, during and after the dispatch.
• Security: The data and information are safe, and we also have the certainty that the agreed dispatches have been made at the appropriate time.
• Optimization: Resources are scarce and the need to maximize them is imperative, we are spending what is necessary, in the acquired good and at the right time.
• Management: We are optimizing resources with the intervention of technology. On the one hand, we are decongesting people who previously did those repetitive and sometimes cumbersome tasks, and on the other hand, we are delegating to machines that understand each other, with which we manage resources better and we can even minimize the failure that sometimes cause the repetitive tasks.
• Quality: By not relying so much on reckless price drops to be able to award the contracts and yes more of the quality levels, we will be able to be closer to the pursued and always achieve "excellence in service".