Letter of credit query

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

22 April 2016 Dear Sir ,

As you have given better suggestion to all the people . I also need one suggestion regarding the LC discounting . As we are the supplier of the material . We have already supplied the total material to our customer . After the transaction being completed , I have raised the following documents as per the instructions of the LC issuing bank : -

Bill of Exchange ( 100% value of the material )
Tax Invoice
Original copy lorry reciept

But after giving the above documents for discounting , the money got credited in our account next day but the interest amount got deducted from the BOE value ( 100% value of material as mentioned in the bill of exchange ) .
Actually , I have raised the exact invoice value to our customer but not including interest amount . Like example , if invoice value is Rs.1,000/- , i have raised bill of exchange of Rs.1,000/- and the money we got credited of Rs.9,000/- , ( in this regard , Rs.1,000/- as interest is deducted ) .
In this way if I have to make the payment to our supplier of Rs . 9,500 /- ,( then here my profit margin is already being deducted as interest + extra Rs .500/- is gone from my pocket ). How can I deal in this situation , because I need to make the payment to our supplier .
Here my concern is that - Do I need to raise the Debit note as interest to our LC opening party ( our customer ) .
Secondly , from future onwards , Do I need to raise the Bill of exchange of amount Rs. 11/-( Invoice value + interest amount = 10 + 1) because before doing the above transaction , we have asked our discounting bank for doing this thing , they said they don't do the interest discounting .
Thirdly , will I raise the interest for every particular invoice value from future onwards .
This mistake has been done , I don't had an idea about the LC much , so please give me proper suggestion , what better can be done to avoid this .

Waiting for the kind reply .

Thanks & Regards ,
Nitis ,

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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23 April 2016 1 You can't raise any debit note for interest payment.
2 Bill discounting interest rate is on the higher side go for overdraft against LC the bankers will provide you that facility.
3 Include the interest part in your bill of exchange as part of sale value.

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