Letters of credit are contracts that have to be negotiated between the seller and the customer. They are usually used when seller and customer are not in the same country. It is a way to guarantee payment for the goods.
The process seems to be easy but did you know that banks are rejecting about 70% of documents on the first presentation because they do not fit with the letters of credit formalities? To help you to avoid rejected letters of credit Unsworth give you 10 tips.
The cost of letter of credit can reach hundreds or thousands of pounds so you should include this cost in your selling price. There is also a charge for each amendment down by the bank (GBP 50 - GBP 70).
If your description is short the probability to do some mistakes is lower! And you want to avoid mistakes in order to obtain your letter of credit.
The aim is to be sure that the terms of the credit are clear for the two parties and to be sure to have all the documents on time.
You can never be too careful, a final check is important to be sure that the terms of the agreement are adequate.
The freight forwarder is a vital link, they can check your credit and tell you if you need amendments. The Unsworth team have significant experience with letters of credit and are happy to help you prevent further cases of rejected letters of credit.
Everyone involved with documents must agree on the description (word and terminology).
Create a check list while you check the credit to ensure all documents are needed and avoid rejections.
If your shipment is late you risk a non-payment so be focus on your deadlines and do not be late.
Amendments take time and cost money so we suggest you to do it as soon as possible. However, if you did your final check you should not have any modification to do.
We highly recommend you asking a third party to check the documents and always using UCP600 as a guide.
Do not forget that the freight forwarder is your best friend during this procedure. Unsworth Global Logistics has significant experience providing assistance with letters of credit worldwide.
If you need help with your Letters of Credit, feel free to call our dedicated team: +44 (0)20 8539 8899 or send us an email: firstname.lastname@example.org