Are your Letter of Credit documents 'strictly compliant'?

When working with clients, I regularly receive feedback that the banks are 'picky' when checking documents.

You've no doubt heard the term 'dotting the i's and crossing the t's'.

Despite the repeated assertions of the major banks that they exercise common sense when checking documents, we are hearing that checkers repeatedly raise spurious discrepancies such as slight typographical errors, titles of documents and issues with regard to beneficiaries' or applicants' addresses (despite the provisions of UCP 600 article 14j).

Another common issue is the apparent inconsistency, not only between the banks, but also between individual document checkers at the same bank! I have been told many times of instances where documents drawn in respect of a partial shipment have been presented and found to be clean, only for an identical presentation under a subsequent partial shipment to be rejected due to discrepancies.

Such issues continue to be a source of great frustration and represent a constant challenge for exporters shipping against Letters of Credit, therefore we suggest that you follow the mantra I preach throughout my training sessions:

"Don't give the bank document checker a reason to think about whether to pay you!"

In other words, don't leave any room for ambiguity when preparing your documents:

1. Documents to the Letter of Credit - word for word.

2. Documents to each other - keep data consistent.

It is vitally important that your key staff are equipped with the skills and knowledge to handle Letters of Credit, from the point of sales negotiations with buyers through to preparation and presentation of documents to the bank.

It is also necessary for staff to have an appreciation of the provisions of UCP 600 (the L/C 'rules') in order to understand what banks are looking for in terms of data content, signing of documents, interpretations etc.,

Call us on 0800 043 4052 or email us: info@mjhayward.co.uk to see how we can help you minimise risks, cost and hassle when handling Letters of Credit.

In-Company Letter of Credit Training