The notification aspect is telling the Advising Bank or Transferring Bank that the Issuing Bank is ready, able and willing to issue the included MT700/701/710/711 or MT760 verbiage of a DLC respectfully SBLC.
The commitment part is a number of conditions from the Advising Bank to be met to make the Issuing Bank actually issue the specified DLC or SBLC. Those conditions may vary from anything from asking the Advising Bank to confirm that the Beneficiary is ready, able and willing to supply the service or paying for the goods by MT199 or MT799. And also to asking the Advising Bank to issue Proof of Product by MT799 and issue Performance Bond by MT760.
A typical scheme using Pre-advise is like this:
- Buyer’s bank issues pre-advise DLC by SWIFT MT705 or pre-advise SBLC by SWIFT MT766 to seller’s bank; asking for PoP and PB2% for issuing DLC or SBLC and the verbiage for the DLC or SBLC.
- Seller’s bank responds by sending Proof of Product (PoP) by SWIFT MT799 and Performance Bond 2% (PB2%) by SWIFT MT760.
- Buyer’s bank issues DLC by SWIFT MT700 or SBLC by SWIFT MT760.
- Seller ships the goods.