Know your customer. Risks for banks and exporters

We have just received an interesting call from a frustrated exporting client. The company sells a range of power products to global markets, including the Middle East, Asia and Africa, where letters of credit are often used to secure payment. Letters of credit have for many years been advised to the company through various banks, [...]

2017-08-29T14:09:34+00:00 August 29th, 2017|

Common Letter of Credit Documents

As an exporter, how accurate are the letter of credit documents that you present to the bank? We have stated numerous times in our articles and guides that around 70% of documents presented under letters of credit are refused upon first presentation to banks. The International Chamber of Commerce (ICC) Banking Commission has recently announced [...]

2017-06-22T18:36:02+00:00 June 22nd, 2017|

Banks enjoy finding Discrepancies

We constantly receive feedback from exporting companies frustrated by the apparent inflexibility of banks when examining documents presented under letters of credit. The perception is that "banks enjoy finding discrepancies because of the fees they can earn. Easy money!" But is this fair? As a former documentary credits document examiner, I can honestly say that it [...]

2017-03-19T09:07:57+00:00 March 1st, 2017|

When will the Advising Bank Pay?

A documentary credit (also known as a letter of credit or L/C) is not only a vital tool enabling exporters to secure payment from overseas buyers, but should also provide a degree of certainty with regard to cash flow. The standard structure of the L/C includes timings for shipment and presentation, following which (assuming the bank determines [...]

2017-06-12T09:25:53+00:00 February 28th, 2017|

Is the time right for UCP 700?

(Updated 27th April 2017) It is estimated that around 70% of documents presented under documentary letters of credit are rejected upon first presentation to banks due to discrepancies (or apparent discrepancies). In 2007, the International Chamber of Commerce published the latest revision of its rules - "Uniform Customs and Practice for Documentary Credits, Publication 600", [...]

2017-04-27T18:37:37+00:00 January 16th, 2017|

International Trade and How Your Bank Should Help

Having seen a significant growth in international trade during the last couple of decades, there has never been a greater appetite within the financial sector to support exporting and importing companies of all shapes and sizes. The major banks have resourced more international trade specialists in both front line sales and operations, hoping to win [...]

2017-03-19T09:07:57+00:00 December 5th, 2016|

A Cautionary Tale of Incoterms and Payment

How much thought do you give to the underlying contract delivery terms when requesting letters of credit from overseas buyers? The Incoterms® 2010 rules, published by the International Chamber of Commerce (ICC pub. 715), define the responsibilities of seller and buyer in respect of cost, risk and other obligations whilst goods are in transit. Whilst [...]

2017-03-19T09:07:57+00:00 November 2nd, 2016|

Managing the Letters of Credit Process

Who do you currently present your letter of credit documents to? Your own bank? Another preferred bank in your own country? Or…… are you being forced to deal with a local office of the issuing bank or their preferred correspondent?  Consider completing and sending to your customer a Letter of Credit Request Template prior to the issuance [...]

2017-03-19T09:07:57+00:00 October 10th, 2016|

Using Letters of Credit to Finance Transactions

Whilst a letter of credit is an excellent tool in terms of providing payment security to the seller and more certainty of shipment of the goods / provision of services to the buyer, it can also be very useful for improving cash flow for both parties. This factor is rarely considered by sales or purchasing [...]

2017-03-19T09:07:57+00:00 September 26th, 2016|

A Guide to Letter of Credit Charges

In the current global financial climate, many internationally trading companies are turning to Letters of Credit as a means of securing payment from buyers in new or difficult markets. We regularly hear from internationally trading companies who are shocked by the level of letter of credit charges being deducted by UK based advising or confirming banks. When negotiating terms with [...]

2017-03-19T09:07:57+00:00 September 6th, 2016|