Letter of Credit and applications-3

How to check an letter of credit?

When we receive an export credit that has been opened to our company, we are expected to answer the following questions;
– Is this credit a proper/problem-free credit?
– Should we upload to this credit? Will we be able to meet the requirements in this letter of credit and get our money without any problems or delays?
Let's take a look at what we need to do in order to answer these questions;
A) Does the Proforma Bill and/or sales contract and the terms of the credit match our credit subject sale?
B) Is there a requirement on the credit that we cannot fulfill?

What we need to do to compare the terms of credit with the Proforma Invoice and/or sales contract, as stated in Article A;
– Is the credit being reported to us from a bank in Turkey? If that's not the case, we can't be sure there's really an letter of credit.
– Is the name and address of our company correct?
– Is our client's name address correct in the Proforma Bill (or contract)?
– Is the definition of goods consistent with the Proforma Bill (or contract) of goods?
– If the Proforma Bill (or contract) specified a plus/minus tolerance for the amount of goods and the amount of credit, do these tolerances exist for both considerations?
– Is the quantity, unit price, the same as the Proforma Bill (or contract)?
– Is the information about the packaging consistent with the Proforma Bill (or contract)?
– Are the shipping terms consistent with the Proforma Bill (or contract)?
– Is the loading date appropriate? Will the goods be ready at the last loading date specified in the credit? If the goods are ready, will the vehicle or ship be ready on the requested date?
– Is there a requirement against the interests of our company that is not on the Proforma Bill (or contract)?
– Is there a requirement on the credit that we cannot fulfill?
– Are there any discrepancies between the terms of the credit?

If we can give the answers to these questions in a positive way, we can say that he is "fit" for the credit.

When answering the above questions, one detail we need to pay attention to is related to documents to be edited by third parties and organizations. Does the institution, which will regulate the document, agree to write the terms and phrases as requested? Also, is the name of the organization to edit the document exactly as requested in the letter of credit? For example, a surveillance document was requested by ABC INSPECTION COMPANY in the Letter of Credit, although the name of this organization in our country may be ABC INVESTIGATION SERVICES, which must be corrected if the surveillance firm cannot write its name on the document as requested in the credit.

Apart from these, another important issue is the requirement of "TEYIT". If we have a requirement to work with a "TRAINED" credit under our terms on the Proforma Bill (or contract) and we insist on it; Does our bank add confirmation to our credit? Until we meet with our bank and see the article that reports that confirmation has been added, we cannot say that the letter of credit is "TITY". If our bank does not add confirmation and reports that some corrections are required on the credit to add confirmation, we need to contact our client and make the necessary corrections and make the credit an add-on to the confirmation.

The last word; In credit, setbacks are hidden in detail!

Hüseyin TEKGÜÇ
www.inovakademi.com