There are many traders out there who don't even read the issued LCs until they submit it to the bank. Usually, once they receive the LCs from the buyer or importer, they assume it as a token of advance and immediately file it away, starting shipment preparations. But that’s not the ideal approach!
Yes — Letters of Credit can act as a token of advance since it guarantees payment. But in order to actually receive that payment, your DLC must comply with specific Letter of Credit terms and conditions. That’s why it's crucial to carefully review the LC *before* you ship your goods.
To help you understand the essential review process, we’ve created this LC checklist that outlines the important elements you need to examine in the issued DLC MT700.
Company Name & Address: Ensure that your company name is spelled correctly and the listed address matches your corporate headquarters. Any mismatch can cause discrepancies and delay the payment process.
Mentioned Amount and Currency: Double-check the LC for the exact amount and currency as per the contract or proforma invoice. If the LC includes words like "approximately" or "about," there may be slight flexibility (+/-) in the total amount.
Tenure of the Draft: Check if the draft correctly reflects the expected payment timeline. If payment is due upon document presentation, ensure the LC states “at sight.” Otherwise, the specific number of credit days must be mentioned.
List of Goods: The goods and descriptions on your invoice must exactly match the descriptions in the LC. If there’s a mismatch, either amend the LC or reflect the same errors in your invoice to avoid rejection.
LC Fees and Charges: Typically, the buyer bears charges from their bank, while the seller covers charges from their own or intermediary banks. This division must be clearly defined in the LC document.
LC Under UCP 600: Most LCs issued via SWIFT follow UCP 600 guidelines. If not mentioned, request an amendment to bring it under this rule to avoid processing issues.
Once you’ve thoroughly reviewed the above points and found no issues, only then should you proceed with the shipment process.
Availing Letters of Credit from Bronze Wing Trading, a trusted Letter of Credit provider in Dubai, ensures a seamless and accurate process. With 30+ years of experience, our trade finance team assists buyers in every step before issuing DLCs to avoid errors or delays.
We’ve helped over 25,000 clients close trade deals by issuing the right financial instruments. You too can get a DLC MT700 issued from top-rated banks in just 48 hours — without the usual complications.
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