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As it turns out, quite a bit can go wrong with a letter of credit. After all, a letter of credit is really just a statement of intention – not a guarantee of payment. So what can go wrong? Here are a few tips for navigating the letter of credit issue.
Expect intense scrutiny. Even simple documents that seem to have no real importance, if referenced in a letter of credit, will be examined. This can include courier slips, receipts, insurance certificates, and other documents. Faxed copies will be checked against the originals. Banks have been known to refuse to part with money over very tiny and insignificant flaws and mistakes. Everything must match.
Sometimes the details aren’t even on the document. For instance, some destinations do a check that goes far beyond the interpretation of the letter of credit and is based on that specific bank’s personally preferred specifications. How would you know that, if it isn’t literally spelled out? And speaking of spelling, mistakes in spelling an also invalidate a letter of credit.
Comply with any requests for additional information. When a bank does a meticulous examination of the letter of credit, it isn’t unheard of for them to request certain paperwork such as steamship certificates, engineers reports, inspection certificates and other documentation. Comply as soon as possible with these requests, no matter how insignificant or mundane you feel they are. Delay will only exacerbate a problem.
Many of these problems can be circumvented by working with an expert logistical shipping company like K International. Working with an expert means your company will get the benefit of a highly scrutinized, carefully planned letter of credit (as well as any other documents your shipment requires) that is sure to pass muster at any port of call.