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The Letter of Credit
Assignment of Proceeds concept begins with the issuing of a Credit to the
seller or beneficiary. The beneficiary
of the Credit can request the negotiating bank to issue an assignment of
proceeds to a third party. If the
request meets the banks policies for assignment, it issues the assignment to
the nominated or third party. The
assignment of proceeds is a unilateral instrument, and does not have to be
“accepted” or “rejected” by the third party.
Nor is the assignment of proceeds part of the original issued Credit,
and, as such, does not have to be “allowed” or “not allowed” by the buyer
applying for the Credit.
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