As it turns out, quite a bit can go wrong with a letter of
credit. After all, a letter of credit is
really just a statement of intention – not a guarantee of payment. So what can go wrong? Here are a few tips for navigating the letter
of credit issue.
Expect intense scrutiny.
Even simple documents that seem to have no real importance, if
referenced in a letter of credit, will be examined. This can include courier slips, receipts, insurance
certificates, and other documents. Faxed
copies will be checked against the originals.
Banks have been known to refuse to part with money over very tiny and
insignificant flaws and mistakes.
Everything must match.
Sometimes the details aren’t even on the document. For instance, some destinations do a check
that goes far beyond the interpretation of the letter of credit and is based on
that specific bank’s personally preferred specifications. How would you know that, if it isn’t
literally spelled out? And speaking of
spelling, mistakes in spelling an also invalidate a letter of credit.
Comply with any requests for additional information. When a bank does a meticulous examination of
the letter of credit, it isn’t unheard of for them to request certain paperwork
such as steamship certificates, engineers reports, inspection certificates and
other documentation. Comply as soon as
possible with these requests, no matter how insignificant or mundane you feel
they are. Delay will only exacerbate a
problem.
Many of these problems can be circumvented by working with
an expert logistical shipping company like K International. Working with an expert means your company
will get the benefit of a highly scrutinized, carefully planned letter of
credit (as well as any other documents your shipment requires) that is sure to
pass muster at any port of call.
