2.1.2 Applying the Rounding Period
The Good Until Date of an LC is calculated on the assumption, that commission on an LC is applied for whole months. These months start from the date of issue and finish one day before, the starting date of the following period.
At times, the expiry of the LC does not fall exactly on the start date minus one day of a future period. In such a case the LC validity needs to be rounded up, so that the Good Until Date of the LC falls on the start date minus one day of a future period.
The rate period you define is used to determine the period for which the effective commission rate is applicable. Instead of expressing the commission rate on a per annum basis, it is expressed on a rate period basis.
0.5% for 3 months = 2% per annum.
The date that the commission will be Good until is calculated as given below:
DT + (PR * RP) - 1 day
| Term | Description |
|---|---|
| DT | Start date (or Amendment date) |
| PR | Number of periods rounded |
| RP | Rate period |
Parent topic: Calculation Parameters for Rate Type Commission