Documentary credit has been criticized by users due to the complexity of its operations, the number of participants involved in the process, the burden in the administrative chain because of failures, the rigidity of the processes, and the low levels of automation of the tasks.
An operation of export credit is prepared in advance starting with the trade negotiation with the client. Remember that the bank will refuse payment if the terms and conditions of documentary credit are not met.
In order to avoid misunderstandings and inconveniences, let us now present some recommendations to make documentary credit work for you instead of the opposite.
Negotiation is crucial. It is important for exporters and importers to make sure that terms and conditions of documentary credit are clear from start. Make sure you negotiate the choice of bank that is most convenient to you, deadlines, costs and time of payment.
Request an instructive on how to open documentary credit. This model should include a sample of letter of credit or whatever type of documentary credit you will be creating.
Reception of documentary credit. Once the bank has notified the credit, you must look at the terms and conditions mentioned in the credit. Make sure that a restrictive clause is not included.
Inform yourself on how to make modifications to the documentary credit. It may happen that you are unable to fulfill the expectations of the importer. Make sure you establish timely communication with the importer to request any modifications.
Validation of documentary credit: Upon receipt of the notice if necessary, you must ensure that the terms and conditions are now acceptable. If the terms and conditions of the credit may be respected, you can ship the goods.
Before opening and charges, the documentary credit is compared from exporter and importer to make sure everything is the same.
If you were to underline something, pay attention to deadlines, amounts, currencies, exchange rates and of course to the content of the document itself.
Follow-up to the restoration bank. If your bank (notify or confirm) notes irregularities in the presentation of documents, it is advisable to correct the documents or keep them on their counters to and request agreement to the issuing bank mentioning all irregularities.
An operation of export credit is prepared in advance starting with the trade negotiation with the client. Remember that the bank will refuse payment if the terms and conditions of documentary credit are not met.
In order to avoid misunderstandings and inconveniences, let us now present some recommendations to make documentary credit work for you instead of the opposite.
Negotiation is crucial. It is important for exporters and importers to make sure that terms and conditions of documentary credit are clear from start. Make sure you negotiate the choice of bank that is most convenient to you, deadlines, costs and time of payment.
Request an instructive on how to open documentary credit. This model should include a sample of letter of credit or whatever type of documentary credit you will be creating.
Reception of documentary credit. Once the bank has notified the credit, you must look at the terms and conditions mentioned in the credit. Make sure that a restrictive clause is not included.
Inform yourself on how to make modifications to the documentary credit. It may happen that you are unable to fulfill the expectations of the importer. Make sure you establish timely communication with the importer to request any modifications.
Validation of documentary credit: Upon receipt of the notice if necessary, you must ensure that the terms and conditions are now acceptable. If the terms and conditions of the credit may be respected, you can ship the goods.
Before opening and charges, the documentary credit is compared from exporter and importer to make sure everything is the same.
If you were to underline something, pay attention to deadlines, amounts, currencies, exchange rates and of course to the content of the document itself.
Follow-up to the restoration bank. If your bank (notify or confirm) notes irregularities in the presentation of documents, it is advisable to correct the documents or keep them on their counters to and request agreement to the issuing bank mentioning all irregularities.
About the Author:
Wade Henderson - recognized Professional - 15 yrs in the Business Finance Field - strong reputation for getting the deal done. IMMFinancial.com Letter Contract Standby Letter of Credit Grab a totally unique version of this article from the Uber Article Directory
