As far as I know when a credit note is created, the issuing bank assumes responsible for making the payments after receiving the beneficiary’s or their banker’s documentation. If the documents are in compliance with the line of credit’s terms and conditions, payments must be made to the recipient within 7 working days from the day they were received at their end. If any of the records are in error, they must be rejected and notified within 7 working days of the date the documents were received at their end.
You (the buyer) and your foreign supplier entered into a contract for the importing machinery for use in factory manufacturing. According to the terms of the agreement, the buyer must issue a Letter of Credit (LC). To create a Note of Credit, you can contact your bank. Your bank (or another opening bank) opens a letter of credit, and the machinery’s foreign vendor is the intended beneficiary. A credit note is a guarantee provided to your buyer’s bank by your banking partner (not you) on their behalf. According to the terms and circumstances stated in the letter of credit, the amount covered by the LC is transferred. You receive assistance from the bank’s concerned officer in completing out the relevant paperwork to open an LC.