Import LC Exposure Report — Complete User Guide — Two Accounts Web

Comprehensive guide for the Import LC Exposure Report — enabling it, creating the report, reading every column, and validating each figure against the Letter of Credit postings, the General Ledger, and accounting regulations

Table of Contents

1. What Is the Import LC Exposure Report?
2. Prerequisites — Enabling via the Customize Menu
3. Navigating to the Report
4. The Report List
5. Creating the Report — Field-by-Field
   • 5.1 From Date and To Date
   • 5.2 Description
   • 5.3 Division
   • 5.4 Project
   • 5.5 Suppliers
   • 5.6 Group By Supplier
6. Report Output Columns
7. How the Report Is Calculated
   • 7.1 Which LCs Are Included
   • 7.2 Currency and Exchange Rate
   • 7.3 LC Amount and Margin Used
   • 7.4 Total Payable, Landed Cost and VAT
   • 7.5 Accrued Interest
   • 7.6 Payments and Outstanding
   • 7.7 Status
   • 7.8 Contingent Liability Note
8. Related Settings and Configuration
9. Sample Data and Report Output
   • 9.1 Sample Setup
   • 9.2 Creating the Report
   • 9.3 Report Output — Without Grouping
   • 9.4 Report Output — Grouped by Supplier
   • 9.5 Calculation Verification
10. General Ledger Verification
11. Reporting and Accounting Impact
12. Accounting Regulation Validation
13. Common Issues and Best Practices

1. What Is the Import LC Exposure Report?

The Import LC Exposure Report gives a one-glance picture of every Import Letter of Credit (LC) in a period and how exposed the business is to it.

You can run it flat (one row per LC) or grouped by supplier to see per-supplier exposure sub-totals. The report is the importer's control sheet: it answers "what have we committed, what have we already paid, and what is still outstanding?"

2. Prerequisites — Enabling via the Customize Menu

The report appears under Reports only when the Letters of Credit tab is enabled for the business. Letters of Credit is not enabled by default and it depends on the Inventory Items tab.

How to Enable

1. Open the Customize Menu from the navigation bar.
2. First ensure the Inventory Items toggle is on — the Letters of Credit tab requires it.
3. Turn on the Letters of Credit toggle (this also enables the LC document form).
4. Click Update / Save to apply.

Once enabled, the report is available under Reports → Inventory Items → Import LC Exposure Report.

3. Navigating to the Report

From the main navigation bar:

1. Open Reports.
2. Go to the Inventory Items category.
3. Click Import LC Exposure Report.

This opens the report list — every saved LC Exposure report for the business appears here.

4. The Report List

The list shows one row per saved report. Its columns are:

Each row is clickable:

• Click the row to open the report output.
• Edit opens the report form to change any setting.

A New Report button at the top creates a fresh report.

5. Creating the Report — Field-by-Field

Click New Report to open the report form. It contains the following fields:

5.1 From Date and To Date

5.2 Description

5.3 Division

5.4 Project

5.5 Suppliers

5.6 Group By Supplier

6. Report Output Columns

The report opens with a subtitle:

For the period from {From Date} to {To Date}

The table reads one row per LC (or per LC within its supplier group). The columns are:

* Division and Project columns are shown only when the period's LCs actually use them — the report hides them when no LC has a division or project set, keeping the output clean.

7. How the Report Is Calculated

7.1 Which LCs Are Included

The report reads all Import Letter of Credit documents whose document date falls within the inclusive From–To range. The optional Division, Project and Supplier selections narrow that set to the LCs you care about. If Group By Supplier is on, the included LCs are collected into supplier groups (ordered by supplier name).

7.2 Currency and Exchange Rate

• If the LC has no foreign currency, its amounts are already in the base currency and used as-is.
• If the LC is in a foreign currency (e.g. USD), the LC's own exchange rate (fixed at issuance, e.g. 1 USD = 110 BDT) converts the LC amount and margin into the base currency.
• The exchange rate handles the inverse format if selected on the LC (i.e. 1 BDT = X USD).

7.3 LC Amount and Margin Used

LC Amount (displayed) = LC Amount × exchange rate    (foreign LC)
                       LC Amount                     (base-currency LC)

Margin Used = LC Amount × Margin % / 100 × exchange rate   (foreign LC)
              LC Amount × Margin % / 100                   (base-currency LC)

The LC Amount is the CIF value of the goods (as entered on the LC header) and is the basis for the margin/financing split. Margin Used is the portion the importer commits upfront (per the bank's margin requirement).

7.4 Total Payable, Landed Cost and VAT

These three figures are read from the LC's General Ledger postings (created when the LC reaches Documents Presented):

VAT         = sum of the LC's tax-transaction GL amounts (the tax lines, e.g. import VAT)

Landed Cost = sum of the LC's non-tax, non-balancing GL amounts
              (inventory/goods + duties + landed costs + advance tax assets + period costs)

Total Payable = Landed Cost + VAT

• VAT corresponds to the import VAT posted to the tax receivable (e.g. VAT-15% on the CIF + duties base).
• Landed Cost covers everything else posted for the LC: the capitalised inventory cost (CIF + duties + landed costs), the recoverable advance income tax assets (AIT/AT/WHT), and the period costs that hit the P&L (bank charges, commission, interest).
• If an LC has no GL postings (still Draft/Opened, or nothing posted), Total Payable falls back to the LC's base-currency amount so the report still shows the commitment.

7.5 Accrued Interest

Accrued Interest = sum of all interest accrual history entries for this LC

For Usance LCs, the system can accrue interest (Financed Portion × annual rate × days / day-count basis). Each accrual journal entry adds to the LC's accrual history, and the report sums that history for the LC. Interest is shown separately — it does not feed the Total Payable figure.

7.6 Payments and Outstanding

Total Paid = payments made against the LC
           + LC adjustment journal entries touching the payable accounts

Outstanding = Total Payable − Total Paid

• Payments: every payment (from the Payments module) that has a line linked to this LC contributes its amount.
• LC adjustment journal entries: journal entries recorded as LC adjustments whose lines affect the LC payable / accounts-payable accounts also count as paid.
• The interest-expense and accrued-interest lines of such journals are not counted as payments — only the payable lines are.
• For foreign-currency LCs, the journal-adjustment amounts are already in the base currency and are added directly.

7.7 Status

The report displays the LC's current status exactly as stored on the document:

• Draft — created but not yet issued,
• Opened — issued, bank committed; no GL entries yet (off-balance-sheet),
• Documents Presented — supplier shipped; all GL entries posted,
• Paid — settled,
• Closed — fully resolved,
• Cancelled — reversed.

The status drives whether GL figures exist: only Documents Presented / Paid LCs carry the postings the report reads for Total Payable, Landed Cost, VAT, and Outstanding.

7.8 Contingent Liability Note

At the bottom of the report, the system adds a footer note when LCs are still in Opened status within the period:

Note: {total} in off-balance-sheet LC commitments (Opened status) are contingent liabilities not yet recognized on the Balance Sheet. Disclosed per IAS 37 §86.

The total is the sum of the base-currency LC amounts of all Opened LCs dated inside the period. This is the standard IAS 37 disclosure for irrevocable commitments — the commitment exists but no liability is recognised until documents are presented.

8. Related Settings and Configuration

9. Sample Data and Report Output

9.1 Sample Setup

Business settings

Suppliers

Import LCs in the period (January 2026)

LC-2026-001 — China Trading Co.

LC-2026-002 — Japan Trading Corp

LC-2026-003 — China Trading Co. (shows the Opened / contingent-liability case)

GL postings behind the sample

LC-2026-001 (China Trading Co., USD, paid):

Dr  InventoryOnHand (Widget-X: CIF 16,50,000 + duties + landed)   28,69,250
Dr  TaxReceivable (VAT-15% on CIF + duties)                        3,98,475
Dr  LCExpense (commission, bank fees, etc.)                           34,500
Dr  InterestExpense                                                    6,000
Dr  AdvanceIncomeTax (AIT + AT + WHT)                               2,75,250
  Cr  AccountsPayable (margin 30% + other costs)                   24,28,475
  Cr  LetterOfCreditPayable (financed 70%)                          11,55,000
                                                      ──────────   ──────────
  Total Debits: 35,83,475   Total Credits: 35,83,475   ✓ Balanced

LC-2026-002 (Japan Trading Corp, BDT, partially paid):

Dr  InventoryOnHand (CIF 25,00,000 + duties + landed)              42,00,000
Dr  TaxReceivable (VAT-15%)                                           6,00,000
Dr  LCExpense (commission, bank fees, etc.)                           1,50,000
Dr  InterestExpense                                                     50,000
Dr  AdvanceIncomeTax (AIT + AT + WHT)                                 2,00,000
  Cr  AccountsPayable (margin 30% + other costs)                    34,50,000
  Cr  LetterOfCreditPayable (financed 70%)                           17,50,000
                                                      ──────────   ──────────
  Total Debits: 52,00,000   Total Credits: 52,00,000   ✓ Balanced

LC-2026-003 (China Trading Co., BDT, Opened): no GL postings exist (off-balance-sheet commitment).

Payments and accruals

• LC-2026-001 — paid in full: AP portion 24,28,475 + financed portion 11,55,000 = 35,83,475 paid → Outstanding 0.
• LC-2026-002 — partially paid: 40,00,000 paid so far; an LC interest accrual of 25,000 has been recorded.
• LC-2026-003 — nothing paid.

9.2 Creating the Report

From Reports → Inventory Items → Import LC Exposure Report, click New Report and enter:

9.3 Report Output — Without Grouping

For the period from 1-Jan-2026 to 31-Jan-2026

Contingent liability note (from the footer):

Note: 30,00,000 in off-balance-sheet LC commitments (Opened status) are contingent liabilities not yet recognized on the Balance Sheet. Disclosed per IAS 37 §86.

9.4 Report Output — Grouped by Supplier

With Group By Supplier on, the same LCs are grouped under each supplier, each group closed by a bold "Subtotal: {Supplier}" row:

For the period from 1-Jan-2026 to 31-Jan-2026

9.5 Calculation Verification

LC-2026-001 (China Trading Co., USD @ 110, Paid):

LC Amount (displayed) = 15,000 × 110                          = 16,50,000  ✓
Margin Used           = 15,000 × 30% × 110                    =  4,95,000  ✓
Landed Cost           = 28,69,250 + 34,500 + 6,000 + 2,75,250 = 31,85,000  ✓
VAT                   = 3,98,475                                         ✓
Total Payable         = 31,85,000 + 3,98,475                  = 35,83,475  ✓
Total Paid            = 24,28,475 + 11,55,000                 = 35,83,475  ✓
Outstanding           = 35,83,475 − 35,83,475                 = 0          ✓
Accrued Interest      = 0                                                ✓

LC-2026-002 (Japan Trading Corp, BDT, Documents Presented, partially paid):

LC Amount (displayed) = 25,00,000                                          ✓
Margin Used           = 25,00,000 × 30%                        =  7,50,000  ✓
Landed Cost           = 42,00,000 + 1,50,000 + 50,000 + 2,00,000 = 46,00,000 ✓
VAT                   = 6,00,000                                          ✓
Total Payable         = 46,00,000 + 6,00,000                   = 52,00,000  ✓
Total Paid            = 40,00,000                                         ✓
Outstanding           = 52,00,000 − 40,00,000                  = 12,00,000  ✓
Accrued Interest      = 25,000                                             ✓

LC-2026-003 (China Trading Co., BDT, Opened):

LC Amount (displayed) = 30,00,000                                          ✓
Margin Used           = 30,00,000 × 30%                        =  9,00,000  ✓
Landed Cost / VAT     = 0 (no GL postings yet)                            ✓
Total Payable         = fallback to LC amount                   = 30,00,000  ✓
Outstanding           = 30,00,000 − 0                          = 30,00,000  ✓
Contingent liability  = 30,00,000 (Opened LCs in period)                  ✓

Column totals (flat view):

LC Amount    = 16,50,000 + 25,00,000 + 30,00,000   = 71,50,000  ✓
Total Payable= 35,83,475 + 52,00,000 + 30,00,000   = 1,17,83,475 ✓
Landed Cost  = 31,85,000 + 46,00,000 + 0           = 77,85,000  ✓
VAT          = 3,98,475 + 6,00,000 + 0             = 9,98,475   ✓
Outstanding  = 0 + 12,00,000 + 30,00,000           = 42,00,000  ✓
Margin Used  = 4,95,000 + 7,50,000 + 9,00,000      = 21,45,000  ✓

10. General Ledger Verification

Every figure in the report is a sum (or a fallback) of the LC's General Ledger postings. For LC-2026-001 the postings are:

  Dr InventoryOnHand (Widget-X)                 28,69,250
  Dr TaxReceivable (VAT-15%)                      3,98,475
  Dr LCExpense                                     34,500
  Dr InterestExpense                                6,000
  Dr AdvanceIncomeTax                             2,75,250
    Cr AccountsPayable (margin + other)                    24,28,475
    Cr LetterOfCreditPayable (financed)                    11,55,000
                                       ──────────   ──────────
  Total Debits: 35,83,475   Total Credits: 35,83,475   ✓ Balanced

How each report column maps to the GL:

Cross-check with the Balance Sheet / Trial Balance after posting (LC-2026-001):

InventoryOnHand      28,69,250
TaxReceivable         3,98,475
AdvanceIncomeTax      2,75,250
LCExpense                34,500
InterestExpense           6,000
AccountsPayable                          (24,28,475)
LetterOfCreditPayable                    (11,55,000)
                       ──────────         ──────────
Total                 35,83,475           35,83,475   DR = CR ✓

After full payment: paying AP 24,28,475 and LCP 11,55,000 brings AccountsPayable and LetterOfCreditPayable to zero and reduces cash — the report then shows Outstanding = 0, matching the LC view's "Outstanding = 0, Fully Paid".

11. Reporting and Accounting Impact

• Balance Sheet: Once an LC is Documents Presented, its costs are capitalised to InventoryOnHand (goods, duties, landed costs) or FixedAssetsAtCost; recoverable taxes go to TaxReceivable and AdvanceIncomeTax; and the obligation splits into AccountsPayable (margin + other costs) and LetterOfCreditPayable (financed portion). The report's Landed Cost + VAT = Total Payable reconciles to these balances before payment.
• Profit & Loss: Period costs (commission, bank fees, interest) hit LCExpense and InterestExpense and appear in the report's Landed Cost figure — they are the only LC items in the P&L.
• Cash Flow: The report itself contains no cash flows, but its Outstanding column, combined with payments, is the basis for forecasting the cash needed to settle open LCs.
• Inventory / asset values: The landed cost capitalised into inventory is exactly what the report shows, making the report a natural cross-check of imported inventory valuation (IAS 2).
• Contingent liabilities: Opened LCs are disclosed in the report footer — an important IAS 37 note for lenders and auditors.

12. Accounting Regulation Validation

13. Common Issues and Best Practices

13.1 The Report Does Not Appear

Cause: Letters of Credit is not enabled (or Inventory Items is off), or the user lacks report permission.

Solution: Enable Inventory Items then Letters of Credit in the Customize Menu, or ask the administrator to grant report access.

13.2 An LC Is Missing From the Report

Cause: The LC's document date is outside the From–To range, or a Division/Project/Supplier filter excludes it.

Solution: Widen the date range or clear the filters. Remember the range is inclusive.

13.3 Total Payable Equals the LC Amount (No GL Breakdown)

Cause: The LC is still Draft/Opened, or its status was not changed to Documents Presented, so no GL postings exist.

Solution: Change the LC status to Documents Presented (and check its cost lines and tax codes) so the GL — and therefore the Landed Cost, VAT and Total Payable breakdown — is generated.

13.4 Outstanding Looks Too High / Wrong

Cause: Payments were recorded without linking a line to the LC, or LC adjustment journal entries did not touch the payable accounts, so they were not counted as paid.

Solution: Ensure payments select the LC on their lines, and record LC settlement adjustments through the payable accounts (not only through interest/accrual accounts).

13.5 Foreign-Currency LC Shows the Wrong Amount

Cause: The exchange rate on the LC is 0, blank, or entered in the wrong format (inverse when it should be standard).

Solution: Set a valid rate on the LC (e.g. 110 for 1 USD = 110 BDT) and confirm the inverse flag matches the convention.

13.6 VAT Shows 0 for an LC That Should Have VAT

Cause: The goods / CIF cost line has no TaxCode, so no tax-transaction was posted.

Solution: Set the VAT tax code (e.g. VAT-15%) on the goods lines. Duties feed the VAT base; only the goods lines carry the TaxCode.

13.7 Accrued Interest Is Blank or Wrong

Cause: No interest accrual has been recorded for the LC (no accrual history), or the LC has no financing / rate.

Solution: Run the interest accrual for Usance LCs with a finance rate; the report sums the accrual history.

Best Practices

• Run one report per period (e.g. each month) with a clear Description — the saved list makes month-on-month exposure analysis easy.
• Use Group By Supplier for a per-beneficiary exposure control, and the flat view when auditing individual LCs.
• Reconcile Total Payable per LC to the Trial Balance (InventoryOnHand + TaxReceivable + AdvanceIncomeTax + LCExpense + InterestExpense) for the same period.
• Reconcile Outstanding to the LC view ("Outstanding = 0" means fully settled).
• Keep LCs at Opened only while truly unshipped, then move to Documents Presented so the exposure is reflected in the ledger and the report.
• Ensure every payment is linked to the LC so Outstanding stays accurate.
• Review the contingent-liability footer at period end — it is your IAS 37 disclosure figure for off-balance-sheet LC commitments.

End of Import LC Exposure Report Guide