Key Points For Examination After Receipt Of Letter Of Credit

(1) checking the payment guarantee of a letter of credit is effective.

It should be noted that one of the following circumstances is not an effective one.

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2. the confirmed letter of credit is not required by the request.

3. the letter of credit has not entered into force.

4. Conditional Letter of credit effective, such as: "to be effective after obtaining the import licence".

5. the letter of credit is not in conformity with the pledge.

6. letter of credit or brief notice.

7. letter of credit sent directly by the issuer;

8. an application for opening a letter of credit provided by a witness;

(two) check whether the payment time of the letter of credit is consistent with the relevant contract stipulations.

Special attention should be paid to the following situations:

1. the letter of Credit stipulates that the payment must be made within a certain day after presentation to the bank or within a certain day after sight.

In this regard, we should check whether such payment time is in line with the requirements of the contract or your company.

2. letter of credit expires abroad.

Stipulate that the letter of credit expires abroad, and the relevant documents must be sent abroad. Because we can not grasp the time required for the arrival of foreign documents by the documents, and it is easy to delay or lose, there is a certain risk. Usually we require payment in domestic documents. Payment must be made in advance.

3. if the date of validity and validity of the letter of credit is the same day, commonly known as "double expiration", in the actual business operation, the installation period should be advanced in advance (usually 10 days before the expiration date), so that there is a reasonable time to make foreign exchange.

(three) check whether the name and address of the beneficiary and the issuer of the letter of credit are complete and accurate.

The beneficiary should pay special attention to the name and address of the beneficiary in the letter of credit. It should be consistent with the name and address of the printed document. Is the buyer's company name and address written correctly? It is possible to copy the name and address of the buyer's company wrongly when filling out the invoice. If the name of the beneficiary is incorrect, it will inconvenience the future collection.

(four) check whether the relevant provisions of the inspection period meet the requirements.

The shipping documents stipulated in the L / C will form a discrepancy, and the bank has the right not to pay.

We should pay attention to the following points when checking the date of shipment stipulated in the letter of credit.

1. is it possible to prepare the relevant goods and deliver them on time during the period stipulated in the L / C? If the LC is too close to receive the shipment on time, it should contact the customer in time for amendment.

2. the actual loading period and the time limit for the documents are too short.

3. the letter of Credit stipulates the time and quantity of shipment in batches. We should pay attention to whether or not it can be done. Otherwise, any batch of unscheduled delivery will be invalid after every period.

(five) check whether the documents can be made during the presentation period stipulated in the letter of credit.

The date of presentation of documents to the bank is not later than several days after the date of the bill of lading. If the deadline is not correct, the bank has the right not to pay.

The presentation period is usually handled according to the following principles:

1. if the L / C stipulates, the documents should be presented to the bank in accordance with the time of presentation stipulated in the letter of credit.

2. the date of presentation to the bank is not later than 21 days after the date of the bill of lading, as stipulated in the letter of credit.

Full consideration should be given to the following matters affecting the presentation period:

1. the time needed for production and packaging.

2. the time required for inland pportation or port collection.

3. carry out necessary inspection, such as the time required for statutory commodity inspection or customer inspection.

4. apply for the time required for export licence /FA certificate of origin (if necessary).

5. the time required for customs clearance.

6. shipping schedule.

7. the time required for certification or certification by the chamber of Commerce and / or consulates.

8. apply for inspection certificates such as SGS inspection report /OMIC LETTER or other inspection reports such as customer identification.

9. the time required to manufacture, collate and audit documents stipulated in the letter of credit.

10. the time required to send the documents to the bank includes the time when the documents were sent to the bank for examination and found that they were returned to the correct time.

(six) check whether the contents of the letter of credit are complete.

If a letter of credit is pmitted by telex or telegraph to the advising bank, that is, "telecommunication service", the contents of the message should be verified if the content is complete. If the message is not specified, it is stated that the message can be executed as a valid Letter of credit in accordance with the general rules for the uniform practice of documentary credits, No. 500th of the International Chamber of Commerce series.

(seven) it is safe and reliable to check the letter of credit.

A letter of credit is generally notified to the beneficiary through the notification / confirming bank in the country or region where the beneficiary is located.

The letter of credit notification in this way is safer, because the notification bank is responsible for the authenticity of the letter of credit in accordance with the relevant provisions of the general rules for the uniform practice of documentary credits, No. 500th of the International Chamber of Commerce series.

1. letter of credit is directly sent to you from overseas, so your unit should be careful to find out its origin.

2. letter of credit is sent from a local address, requiring your unit to send shipping documents overseas, and your unit does not know the bank they specify.

For the above situation, we should first check through the bank.

(eight) check the amount of the letter of credit and whether the currency is in conformity with the contract stipulations.

The main contents are:

1. is the amount of the L / C correct?

2. the amount of the letter of credit should be consistent with the prior consultation.

3. the unit price and the gross value of the letter of credit must be accurate, capitalized and consistent in content.

4. if there is a certain degree of expansion in quantity, the letter of credit should also provide for a certain extent when payment is allowed.

5. if the word "approximate" is used before the amount, it means allowing the amount to have a 10% expansion.

6. check whether the currency is correct.

For example, the currency stipulated in the contract is "pound" and the letter of credit uses "US dollar".

(nine) check whether the quantity of the letter of credit is consistent with the contract stipulations.

Attention should be paid to the following points:

1. unless the quantity stipulated in the letter of credit is not allowed to increase or decrease, the quantity of the goods can be allowed to increase or decrease by 5% if the amount of payment does not exceed the amount of the letter of credit.

2. special attention is paid to the fact that the quantity of goods mentioned above can be increased or reduced by 5%, which is generally applicable to bulk goods, and is not applicable to goods packaged in units or units.

Such as: 5000PCS 100% COTTON SHIRTS (5000 cotton shirts), because the quantity unit is "piece", the actual delivery time can only be 5000, but not 5% increase or decrease.

(ten) check whether the price terms are in conformity with the contract stipulations.

Different price terms relate to specific expenses such as freight and insurance premiums.

For example, it is stipulated in the contract that FOB SHANGHAI AT USD50/PC is borne by the buyer as the opening witness according to the price clause; if the price clause in the letter of credit is not made as stated in the terms of the contract,

Instead, the following stipulations are made: CIF NEW YORK AT USD50/PC, if the clause is not amended in time, the beneficiary will bear the related freight and insurance premium.

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(eleven) check whether the goods are allowed to be shipped in batches.

Unless otherwise stipulated in the letter of credit, the goods are allowed to be shipped in batches.

Special attention: if a letter of Credit stipulates the exact time for shipment of each shipment, it must be followed accordingly. If it is not possible, it must be amended.

(twelve) check whether the goods are allowed to be phipped.

Unless otherwise stipulated in the letter of credit, the goods are allowed to be phipped.

(thirteen) check the relevant expense terms.

The main contents are:

1. the relevant fees stipulated in the letter of credit, such as freight or inspection fee, should be agreed in advance. Otherwise, the extra cost should not be borne in principle.

2. if bank fees are not agreed in advance, they should be jointly undertaken by both parties.

(fourteen) check whether the documents stipulated in the letter of credit can be provided or provided in time.

There are:

1. some certified documents, especially embassy accreditation, can be processed and provided in time.

2. can the relevant documents issued by other agencies or departments, such as export licenses, freight receipts, inspection certificates, etc. be provided or provided in time?

3. in the letter of credit, the specified age, ship, shipping company or no port phipment can be done.

(fifteen) check whether there is any trap clause in the letter of credit.

Special attention should be paid to the fact that the following L / C terms are highly pitfalls, which have great risks.

1. 1/3 original bill of lading sent directly to the customer's terms.

If you accept this clause, you will be in danger of two empty goods at any time.

2. make the passenger inspection certificate as the terms of the negotiation document.

Acceptance of this clause, the beneficiary's normal handling of the letter of credit initiative is largely in the hands of the other party, affecting the safety of foreign exchange collection.

(sixteen) check whether there are any discrepancy in the letter of credit.

For example, it is air freight, but requires ocean bill of lading.

The Ming price clause is FOB, the insurance should be handled by the buyer, and the letter of credit is required to provide insurance policy.

(seventeen) check whether the relevant letters of credit are subject to the general rules of interpretation of uniform customs and Practice for documentary credits No. 500th of ICC series.

It is clear that the letter of credit can be construed by the International Chamber of Commerce Serial No. 500th, the general rules of interpretation of documentary credits, which enables us to have a generally accepted interpretation and understanding of the relevant provisions of the letter of credit in the specific handling of the letter of credit.

Avoid disputes arising from different understandings of a particular rule.

(eighteen) if there is any doubt about a certain problem, you can ask the advising bank or the paying bank to get their help.