Factors to Check When Reviewing An LC

Bank policies can be stringent. Without an accurate LC, you may not get your money from the bank. That's one of the reasons why we advise a review of this document, to ensure it is error-free. Sometimes even a difference in spelling can put your money on hold for months.

We therefore always advise exporters to give maximum attention to their LC and ensure that it meets the rules and passes the standard international trade banking practices. It is also worthy to note that sometimes companies that do not qualify as banks tender this letter of credits which means as an exporter you have to be extra careful.

The habit of not examining your letter of credit upon arrival should come to an end. It is not until you are ready to collect your money you start verifying your information. We have listed below some of the important things to look out for while verifying your LC.

Are the Companies Details Correctly Stated?

Sometimes the buyer's bank may have wrongly spelled your company's name or mixed up an address or two. Remember to not only check your company's details but also check that the importer’s company details are accurate to avoid disparity.

Is the Currency and Amount Stated on The LC In Line with The Sales Contract?

The currency and amount stated must be in line with what is on the sales agreement. Note that you cannot receive more than what has been stated as the credit cost. Beware of words like approximately, around, about being used to describe the amount of the LC. Also, ensure the currency symbol is accurate.

Is the Payment Condition Acceptable?

A complete letter of credit should state in clear terms when the exporter will be paid. Will payment be made after the shipping document has been seen or at a specified date after goods have been sent. Also, confirm that the payment terms are not different from what is on the sales contract.

Are the Goods and Services Described Correctly?

One of the LC policies states that the description of goods and services on your invoice should be the same as the description in your LC. Even if wrongly spelled. Also, additional goods can't and shouldn't be stated on the invoice even if they are free.

Is It Necessary for The LC To Be Confirmed in Your Country?

This is one of the ways to ensure you are dealing with the right people. So, it is okay to confirm the LC is authentic with one of the leading banks in your country.