Commercial Activities in Garments Industry

The Commercial Department plays a significant role in ensuring the seamless processing of imports and exports in the garment industry. It is directly involved in managing the supply chain for raw materials and finished goods, collaborating with banks, government authorities, and customs offices to ensure smooth operations. Below are the key responsibilities of the Garments' Commercial department:

Documents Required for Garment Export

Documents that are usually sent by the exporter’s bank to the importer’s bank to deliver to importers against payment and/or acceptance are called export documents. Export documents must include evidence of the merchandise having been loaded onto a vessel. These documents are essential to clear customs and take delivery of imported merchandise.

Sea Freight Calculation and Charges

Freight or Cargo means merchandise that is transported in bulk; cargo refers to the merchandise being transported by aircraft or ship while freight refers to truck and train. But now the term freight usually refers amount payable for carriage and cargo refers to merchandise only. Garments may be transported on freight-prepaid or freight-collect basis depending on Incoterms.

Air Freight Calculation and Charges

Freight or Cargo means merchandise that is transported in bulk; cargo refers to the merchandise being transported by aircraft or ship while freight refers to truck and train. But now the term freight usually refers amount payable for carriage and cargo refers to merchandise only. Garments may be transported on freight-prepaid or freight-collect basis depending on Incoterms.

Letter of Credit Checklist for Merchandiser

A merchandiser should check the following points/clauses to verify that all terms and conditions in the L/C agree with his/her price quotation or sales agreement (PO) and that they will be able to comply with the order as requested by the buyer.

Back to Back LC in Perspective of Bangladesh

In the perspective of Bangladesh, a back-to-back LC is one which is issued on behalf of an export oriented industrial unit against the security of an export LC for procurement of raw materials either locally or from abroad.

Types of LC

A letter of credit (LC) is an important financial tool in trade transactions for both domestic and international markets. Various types of LC are used in trade transactions between buyers and sellers. As an apparel exporter, one should understand all the different types of L/C to pick one that serves the purpose. Some of them are defined below.

Letter of Credit Mechanism

Letter of Credit (or Documentary Credit) is an undertaking issued by a bank for the account of the buyer or for its own account, to pay the seller against the value of the draft and/or other documents provided that the terms and conditions of the credit are complied with. LC is usually subject to the Uniform Customs and Practice for Documentary Credits, International Chamber of Commerce Publication No. 600 (UCP 600).

Methods of Payment in International Trade

In international trade procedures, the seller and buyers want to make business under the best conditions for themselves. In apparel trading it is quite critical for both buyer and seller to settle how the payment will be made as buyer and seller both are like to optimize their advantage and risks in trade. 

Common Abbreviations for Commercial & Shipping

Following Abbreviations may be used in Commercial & Shipping.

SWIFT Field Definitions for L/C

Swift is a provider of secure message platform for financial institutions mainly for banks. Swift messages send and received by banks in encrypted forms. As a result swift messages are accepted as a valid and reliable way of communication between banks. Swift messages play a key role not only in letters of credit but also other payment methods in international trade such as cash in advance payment, documentary collections, open accounts and bank payment obligations.

INCOTERMS

International Commercial Terms, known as “INCOTERMS” are internationally accepted and widely used a series of three-letter trade terms published by International Chamber of Commerce (ICC).

Proforma Invoice

A proforma Invoice is a seller generated document which is issued to a buyer mentioning goods description, quantity, price, conditions of payment, shipment etc. Buyer accept it and arrange payment accordingly. Unlike commercial invoice it is only declares the seller’s commitment to supply the products or services to buyer. Following is a specimen Proforma Invoice for clear understanding.