Check the draft against the shipment
A letter of credit ties the bank’s undertaking to a complying presentation. Before booking, ask the supplier, forwarder and bank to review whether the shipment and its documents can meet the draft terms.
Make a document matrix that assigns each requirement to someone who can fulfill it. Check company names, goods descriptions, currencies and transport details against the purchase order. Each line of the matrix needs:
- The document name and issuer.
- The required information and number of originals or copies.
- The due date and person responsible for obtaining it.
Work backward from presentation
Put the latest shipment date, expiry, place of presentation and any presentation period on the operating plan. Use the actual credit’s terms rather than copying dates from a generic LC checklist.
Then work back through document issuance, courier or electronic handling and internal review to the carrier booking and cargo-ready date. A document that can be issued eventually may still be impossible to present on time.
Keep the quality arrangements in the sales agreement
When UCP 600 is incorporated into the credit, banks deal with documents rather than the goods or their performance. Payment against a complying presentation is therefore not confirmation that the goods passed a physical inspection. Agree product inspection and acceptance arrangements in the underlying commercial agreement.
Get the charges and responsibilities agreed
The International Trade Administration recommends discussing suitability, fees and dispute handling with the bank before applying. Request an itemized account of issuance, advising, confirmation if used, amendment and discrepancy-related charges. Record who will pay each charge.
Before shipment, bring procurement, logistics and finance together for a final check of the document matrix. Every requirement needs a source document, an owner and a feasible date. If a clause cannot be met, request an amendment while there is time to resolve it.