Blog - 10 Best Practices to Minimize Letter of Credit Problems

10 Best Practices to Minimize Letter of Credit Problems

Oct 29

Written by: Annette Hansbury
Thursday, October 29, 2009 1:05 PM

3. On acceptance of the sales contract, immediately acknowledge that payment will be made under an irrevocable letter of credit.

4. Make sure that the requirements include the minimum number of documents your seller will need to get the goods into the country.

5. Get the purchaser to fax or email you the proposed letter of credit documents.

6. Review the letter of credit documents as soon as they arrive at your office.

7. Learn and use the UCP 600 rules as administered by the International Chamber of Commerce (ICC).

8. Make sure that all documents required and presented with the letter of credit are consistent.

9. If your company uses letters of credit extensively, consider establishing an in-house expert or team of experts that handle only your letters of credit.

10. If your use of letters of credit is not extensive, consider hiring one of the firms that specializes in lettter of credit handlling.

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2 comment(s) so far...

Re: 10 Best Practices to Minimize Letter of Credit Problems

A couple additional "Letter of Credit Tips" I came across...

- Involve your banker early. The more your banker understands your international operation, the more he/she can help.

- Letters of Credit can be expensive. If the value of the order is relatively low, the L/C may not be the the best payment method.

- Letters of credit are only as good as the bank that issues them. If you are concerned, ask your U.S. bank to confirm the L/C. This obligates your U.S. bank to pay upon presentation of documents.

- Always check with your bank to determine whether you should use a confirmed, irrevocable letter of credit.

- Ensure that the shipping and expiration dates of the L/C allow enough time to prepare the shipment, transport and present documents to the bank. Amending an L/C is costly and time consuming!

source: 2003, NxLeveL - Going Global

By Joel Martino on Friday, December 18, 2009 6:19 PM

Re: 10 Best Practices to Minimize Letter of Credit Problems

Joel...Thanks for the additional tips! I'll be sure to add these to the list.

By Annette Hansbury on Friday, December 18, 2009 6:30 PM

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