LC Realizations

An LC realization records receipt of money from the bank against one or more Commercial Invoices covered by a matured Letter of Credit. It is an accounting settlement document, not another ordinary LC lifecycle action.

Creating an LC realization posts immediately: it creates the journal, marks the derived Commercial Invoices PAID, and moves the Letter of Credit from MATURED to REALIZED. There is no draft, edit, or separate Post step.

LC Lifecycle Versus Realization
Routes And Access
Prerequisites
Create An LC Realization
Settlement Preview And Discrepancy
BDT And FX Accounting
Result And Detail Review
Cancel A Realization
Evidence To Retain
Troubleshooting

LC Lifecycle Versus Realization

The Letter of Credit screen manages the LC’s business lifecycle:

DRAFT -> ISSUED -> DOCS_SUBMITTED -> MATURED -> REALIZED -> CLOSED

The separate LC Realizations workflow performs the MATURED -> REALIZED step. Creating, issuing, linking, submitting documents for, or maturing an LC does not itself settle Accounts Receivable. Realization is the point at which Supply Weave records bank proceeds and settles the selected linked invoices.

An LC must already be MATURED. A realization cannot be created for DRAFT, ISSUED, DOCS_SUBMITTED, REALIZED, CLOSED, or CANCELLED LCs.

Routes And Access

In the sidebar, open Accounting Operations > LC Realizations.

List: /lc-realizations
Create: /lc-realizations/create
Detail: /lc-realizations/{id}

These routes require the ADMIN role. The list page supports search by Realization No and Filters for Letter of Credit, Status, Currency, Date From, Date To, and sorting. Select a realization number or View Details to inspect the settlement.

Prerequisites

Before opening New LC Realization, confirm all of the following:

The Letter of Credit is MATURED.
At least one Sales Order is linked to that LC.
The Sales Orders selected for settlement are the same records linked to the LC.
Those Sales Orders have Commercial Invoices derived through their Delivery Challans.
Every derived Commercial Invoice to be settled is POSTED, not DRAFT, PAID, or CANCELLED.
Every derived Commercial Invoice currency matches the LC currency.
The receiving account is an active leaf account. The web picker shows active ASSET leaf accounts classified as CASH or BANK.
The Realization Date, or the current date when omitted, belongs to an existing OPEN accounting period.
The realized amount, bank charge, allowed discrepancy, and exchange rate agree with bank and LC evidence.

The server locks and rechecks the LC, Sales Orders, and Commercial Invoices when creating the realization. A stale screen or preview cannot bypass these checks.

Create An LC Realization

Open Accounting Operations > LC Realizations.
Select New LC Realization.
In Realization Info, choose Realization Date. If it is cleared, the application uses the current date.
Enter Realized Amount in the LC currency. It must be positive and may have up to four fractional digits.
Enter the positive Exchange Rate from LC currency to BDT. It may have up to eight fractional digits.
Enter Bank Charge in the LC currency. It defaults to zero, cannot be negative, and may have up to four fractional digits.
Enter Allowed Discrepancy % when an approved tolerance differs from the default. If omitted, the server uses 0.5%. The value may be from 0 through 100 with up to four fractional digits.
Enter optional Narration that identifies the bank advice or settlement.
In LC Selection, select the Letter of Credit. The picker lists only MATURED LCs and shows LC number and currency.
In Sales Orders, select one or more orders linked to that LC. The screen shows the number selected and the selected SO commitment.
In Bank Account, select the receiving account. The picker is limited to active ASSET leaf accounts classified as CASH or BANK.
Review Settlement Preview, including every invoice, the Derived posted CI total, variance percentage, and allowed tolerance.
Compare the preview with the LC, bank advice, shipping documents, and posted Commercial Invoices.
Select Create LC Realization only after the complete settlement is correct.
Verify the resulting detail page, invoice statuses, LC status, and journal.

The application assigns a daily realization number. Creation, links, journal, Commercial Invoice status changes, and LC status change occur in one transaction. If any part fails, none of those effects should remain committed.

Settlement Preview And Discrepancy

The selected salesOrderIds drive settlement. The operator does not select Commercial Invoices directly.

The web preview follows Delivery Challans from the selected Sales Orders and shows Commercial Invoices currently returned as POSTED. It lists Invoice No, Date, Currency, and Amount, then displays:

Derived posted CI total; and
Realized amount vs preview variance.

The preview is an operator aid, not the final authority. On creation, the server derives Commercial Invoices again from all Delivery Challans for the selected Sales Orders. It rejects the transaction if there are no invoices, an invoice is missing, an invoice is not POSTED, or its currency differs from the LC.

The discrepancy test is calculated in the LC currency:

absolute(realized amount - total derived CI amount)
--------------------------------------------------- x 100
            total derived CI amount

The derived CI total must be greater than zero. Creation is rejected when the calculated percentage is greater than Allowed Discrepancy %. The bank charge is separate and is not included in this discrepancy formula.

Control: The tolerance permits a difference; it does not explain or approve one. Retain evidence and approval for every nonzero discrepancy. Do not increase the tolerance merely to make an error disappear.

BDT And FX Accounting

The realization document retains the LC currency. Journal Entries and financial reports use BDT.

Supply Weave computes:

Booked AR BDT = sum(each linked CI amount x that CI's exchange rate)
Realized BDT  = realized amount x realization exchange rate
Bank charge BDT = bank charge x realization exchange rate
FX difference = realized BDT - booked AR BDT

The realization journal records:

Debit the selected Bank Account for Realized BDT.
Credit 1100 Accounts Receivable for Booked AR BDT.
If Realized BDT is higher, credit 7100 Realised FX Gain for the difference.
If Realized BDT is lower, debit 7200 Realised FX Loss for the absolute difference.
If Bank Charge is positive, debit 6200 Bank Charge Expense and separately credit the selected Bank Account for Bank charge BDT.

The bank charge therefore reduces the net increase in the selected bank account, but it does not change the realized-versus-invoice discrepancy test.

BDT Example

For linked posted invoices totaling BDT 150,000, realized amount BDT 150,000, exchange rate 1, and bank charge BDT 1,000:

Debit Bank BDT 150,000.
Credit Accounts Receivable BDT 150,000.
Debit Bank Charge Expense BDT 1,000.
Credit Bank BDT 1,000.

The net bank increase is BDT 149,000.

Foreign-Currency Example

If linked invoices booked Accounts Receivable at BDT 130 per USD but the bank realizes the USD proceeds at BDT 132 per USD, the realized BDT exceeds booked AR BDT. Supply Weave credits Realised FX Gain for the difference. A lower realization rate produces Realised FX Loss instead.

Use the actual approved bank realization rate. Do not replace each Commercial Invoice’s historical booking rate; it is retained to calculate the booked AR being settled.

Procurement boundary: LC realization settles sales-side Commercial Invoices and Accounts Receivable. It does not settle Purchase Orders, Supplier Bills, or foreign-procurement Accounts Payable, even if the same LC also has linked Purchase Orders. Foreign procurement remains subject to the current limitation that Purchase Orders and Supplier Bills do not carry a booking exchange rate. Use an approved accounting procedure and CA review for non-BDT procurement.

Result And Detail Review

After successful creation:

the realization status is ACTIVE;
all Commercial Invoices derived and linked by the realization become PAID;
the Letter of Credit becomes REALIZED; and
the accounting journal is posted on the Realization Date in its open period.

The detail Overview tab shows:

Realization Details: Realization No, Date, Realized Amount, Bank Charge, and Status;
LC & Bank Account: linked LC, Bank Account, Currency, Exchange Rate, Allowed Discrepancy %, and Narration;
Metadata: Created At, Created By, and Cancelled At;
Settled Sales Orders: the orders selected for settlement; and
Settled Commercial Invoices: the server-derived invoices and captured amounts.

The History tab shows the audit trail. Use Journal Entries, General Ledger, and the relevant financial reports to review the BDT posting and FX or bank-charge lines.

The LC can move from REALIZED to CLOSED only through the separate LC Close action. Do not confuse closing the LC with cancelling its realization.

Cancel A Realization

Only an ACTIVE LC realization can be cancelled. Cancellation is a controlled reversal, not deletion. The application also requires the linked LC still to be REALIZED and every linked Commercial Invoice still to be PAID. This prevents a later LC or invoice workflow from being silently rolled back.

Open the realization detail page.
Review its LC, settled Sales Orders, settled Commercial Invoices, original date, amount, rate, bank charge, and journal.
Obtain approval for reversal.
Select Cancel Realization.
Review the confirmation and select Confirm Cancel.
Verify all resulting statuses and journals.

Cancellation:

requires the current UTC date to belong to an OPEN accounting period;
preserves the original journal and marks it reversed;
creates a separate reversal journal dated in that current period with debit and credit swapped;
changes the realization from ACTIVE to CANCELLED and records Cancelled At;
changes all linked Commercial Invoices back to POSTED; and
changes the Letter of Credit back to MATURED.

The reversal is not backdated to the original Realization Date. Reports ending before the reversal date can show the original realization; later reports can show both the original and reversal.

Warning: The current cancellation restores every linked Commercial Invoice to POSTED and the LC to MATURED. Before cancelling, verify that no later workflow or evidence makes that rollback inappropriate. Do not use a manual journal to imitate the operational status rollback.

Evidence To Retain

Retain evidence that connects the LC lifecycle, invoice settlement, bank receipt, and accounting:

LC number, type, currency, amount, maturity evidence, and status history;
selected Sales Order numbers and proof that each is linked to the LC;
every derived Commercial Invoice number, status, currency, amount, date, and booking exchange rate;
realization number, date, amount, exchange rate, bank charge, and narration;
bank credit advice, statement, SWIFT or equivalent realization evidence;
settlement preview and server-created invoice links;
discrepancy calculation, approved tolerance, and explanation of any variance;
booked AR BDT, realized BDT, bank charge BDT, and FX gain or loss calculation;
selected Bank Account and its CASH/BANK classification;
original journal and, if cancelled, reversal journal;
before-and-after Commercial Invoice and LC statuses; and
History tab and relevant Audit Log records.

Troubleshooting

The LC Does Not Appear

The create picker lists only MATURED LCs, up to 100 recent records. Open the Letter of Credit detail and verify its status. Use the LC lifecycle actions in order; do not attempt realization from ISSUED or DOCS_SUBMITTED.

No Linked Sales Orders Appear

The Sales Order must currently link to the selected LC. Review the LC utilization and Sales Order detail. Selecting another LC clears the form’s selected Sales Orders.

No POSTED Commercial Invoices Appear In Preview

The selected Sales Orders must have Commercial Invoices connected through Delivery Challans, and those invoices must be POSTED. A DRAFT invoice must be posted first. A PAID or CANCELLED invoice is not eligible for realization.

The Server Rejects An Invoice Shown Earlier

The preview can become stale. Creation re-derives and locks the current invoices. Reload the form and inspect whether an invoice status, currency, Delivery Challan, or Sales Order link changed. Do not create a duplicate realization.

Currency Mismatch

Every derived Commercial Invoice must use the LC currency. The realization currency is taken from the LC and cannot be independently selected. Correct the source workflow under an approved procedure; do not alter the exchange rate to hide a currency mismatch.

Variance Exceeds Allowed Discrepancy

Compare Realized Amount with Derived posted CI total in the LC currency. Check selected Sales Orders, invoice completeness, decimal placement, deductions, and bank evidence. Bank Charge does not reduce the amount used in the discrepancy test. Change the tolerance only with documented approval.

No Bank Account Appears

The web picker shows active ASSET leaf accounts classified as CASH or BANK. Check Chart of Accounts for active state, hierarchy, type, and liquidity classification. Do not select a revenue, receivable, or expense account as a substitute.

The Date Is Rejected

The Realization Date must fall in an existing OPEN accounting period. A cancellation instead uses the current UTC date and current open period. Do not change dates only to bypass a closed period.

Required System Account Is Missing

Realization requires 1100 Accounts Receivable, 6200 Bank Charge Expense, 7100 Realised FX Gain, and 7200 Realised FX Loss. Creation should fail atomically when a required account is missing. Ask the system administrator to restore the seeded system accounts; do not create a duplicate or substitute account casually.

Cancellation Is Rejected

Confirm the realization is still ACTIVE and that the current date belongs to an OPEN period. Review the linked LC, invoices, and original journal. Escalate an accounting-integrity error rather than entering a manual offset.

Statuses Do Not Match After An Error

Creation and cancellation are transactional. If you observe only part of the expected journal or status change, stop processing the LC, retain screenshots and IDs, and escalate for investigation. Do not retry until the existing realization, LC, invoice statuses, and journal source are checked.

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Reviewed against the application on: 2026-08-21