Name: Azmi

Would you be so kind as to indicate the best way to calculate commission for a letter of credit available by negotiation, especially negotiation commission (do we need to take country risk into consideration, etc.).
In fact, as this is not a common practice in our country, we lack clear procedures in dealing with this type of credits.

Thank you.

There are some aspects to take into consideration:

• do you negotiate with or without recourse
   

• do you agree to advance funds to the beneficiary on or before banking day funds should be received by the negotiating bank from issuing/reimbursing bank
   

• do you wish to apply a flat commission for checking documents and a separate one (either commission or some kind of interest) for the risk(s) assumed and time period between moment you advance funds to the beneficiary and moment you will receive funds from issuing/reimbursing bank
   

• do you intend to apply different commission depending on beneficiaries reputation and cash flow in case of "with recourse".

Regards
Bogdan