(1) Applicants apply for an L/C to issuing bank

(2) Issuing bank issued L/C to advising bank

In this step if the exporter doubts the Issuing bank's financial capability, then
step (2') occurs: Exporter choose the third bank as a Confirming bank, issuing bank
have to present an L/C to this bank, after that if the confirming bank assure Issuing
bank ability of payment, it will confirm L/C to advising bank. In case of Issuing
bank does not honor, Confirming bank honor instead.
(3) Advising bank delivered L/C to Beneficiary
(4) Exporter ship goods to Importer
(5) Beneficiary present docs to advising bank, and this bank will check the docs
comply with an L/C or not
In this step, if the beneficiary wants to get the amount in advance, step (5')
occurs: Beneficiary present the docs to Negotiating bank instead of Advising bank,
then Negotiating bank will check the docs whether it comply with an L/C or not, if
it is this bank will purchase the docs with a lower price than the price issuing bank
will honor. (6') Negotiating bank forwards docs to Issuing bank (7') After examine,
issuing bank will reimburse for Negotiating bank
(6) Advising bank forward the docs to Issuing bank and Issuing bank did the same
thing as advising bank did in previous step
(7) If the docs comply with L/C then issuing bank (as drawee) will honor to
advising bank
(8) After that, the issuing bank forward the docs to applicant, the applicant examine
the docs to determine honor or not to issuing bank

(9) The advising bank credit the beneficiary account