Friday 25 February 2011

Libya Update

We have received the following update via the Midlands World Trade Forum (MWTF) with regard to the current situation in Libya:

"It is believed that Tripoli port has closed and that Lloyds of London, the insurers are looking at the cost and type of cover that will be made available for freight. The Libyan Embassy in London are not taking phone calls and legalised documents are not being issued.

Most Letters of credit issued by Libyan Banks require documents to be legalised by the Libyan Embassy therefore most presentations will have discrepancies. It will therefore be difficult for the paying Bank to contact banks in Libya and also the buyers of the goods for them to agree the discrepancies.

Exporters should exercise extreme caution before shipping, it is therefore suggested that goods are only shipped once legalised documents have been received.

Alternative solutions are being looked and will keep you updated as we receive them."

Thursday 10 February 2011

A Letter of Credit Success Story

Last night I attended the North West branch meeting of the Institute of Export (IoE International Trade). We received several fascinating presentations on a range of exporting topics, but one in particular given by the host organisation, Innospec, grabbed my attention.

Regular readers of this blog will be familiar with my mantra of effective management of Letters of Credit from sale negotiations through to document presentation. Innospec's Group Assistant Credit Manager told us that like many companies, Letters of Credit have been increasingly used to mitigate the risks associated with new or challenging markets.... and like many companies they were experiencing huge problems with presenting complying documents and incurring very high bank charges.

Upon initial assessment it was found that only 46% of presentations made to the bank under Letters of Credit were compliant.

The company decided to put in place a range of processes, tools and education to equip all relevant company personnel with the skills to effectively and efficiently manage Letters of Credit, thereby significantly reducing the number of discrepancies and amendments.

The result? 

Innospec now have an enviable success rate of 98% compliant presentations to the banks and have seen a massive reduction in associated bank charges.

The message here is not to underestimate the benefit of reviewing your Letter of Credit processes and undertaking a tailored programme of training for your key people. 

It DOES work!