Settle: pay in full or convert into a loan

Steps

1. On accepted documents, Settle, choose the account and the margin to apply.
2. Pay in full: the margin comes back into the account and the supplier is paid the whole amount - a supplier payment, allocated to the supplier invoices you give (else on account).
3. Convert into a loan: a trade-finance loan from the issuing bank for the amount less the margin, in the LC’s currency, on the policy, rate and term you choose. It is drawn into the account and the supplier paid from it - the loan then runs in Treasury → Loans (schedule, interest, repayments, currency conversion).

Good to know

• Foreign currency: the margin is booked at the rate of the day it moved; applied or released at that value, the difference is an exchange gain or loss. Margin still held is revalued at month end with the other foreign balances.