A frequently asked question under a letter of credit is whether there is a foolproof way to ensure the exporter gets paid. There is,and it can be done very easily.

In the letter of credit there is a field for the presentation period and it usually states "within 21 days after date of shipment." This means that once the goods have been shipped,the exporter should present the bill of lading and other shipping documents to the negotiating bank within 21 days. This is so that the importer can receive the shipping documents quickly through the issuing bank to clear the goods from customs in a speedy manner.

Instead,the exporter should ask the importer to stipulate "until expiry date" instead of the usual "within 21 days after date of shipment." The exporter should inform the importer that he will present shipping documents quickly to the negotiating bank after shipment of the goods.

Discrepancies