For trouble-free letter of credit transactions:
- Communicate with your customers in detail before they apply for letters of credit. The letter of credit is part of the sales process, not the shipping process!
- Consider whether a confirmed letter of credit is needed - if in doubt, seek advice.
- Ask for a copy of the application to be faxed to you, so you can check for terms or conditions that may cause you problems in compliance.
- Upon first advice of the letter of credit, check that all its terms and conditions can be complied with within the prescribed time limits.
- Many presentations of documents run into problems with time-limits. You must be aware of up to three time constraints - the expiry date of the credit, the latest shipping date and the presentation period - maximum time allowed between despatch and presentation of documents.
- If the letter of credit calls for documents supplied by third parties, make reasonable allowance for the time this may take to organise.
- After despatch of the goods, check all the documents both against the terms of the credit and against each other for internal consistency.
