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Documents for Bank

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Fri, 03/12/2010 - 09:28
Scotty
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Dear Sirs,

Firstly please excuse my ignorance, I'm very new to this.

My situation is this. I am purchasing from another EU country bagged powder product. We have agreed a 12mth contract and I have set up an RDLC and BG to cover the total of each mth. The documents required by my bank include bill of lading and SGS weight and Quality certificates as POP. I am reselling this product to an African country and they to are setting up RDLC and SLC for the same. My question is if my bank and their bank both require original documents what do I do as the shipping time is brief. Any help much appreciated.

 

Regards

Scotty

‹ Fraction in Invoice amount - can be rounded off ? FCR instead of B/L in export to Algerie ›
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Fri, 03/12/2010 - 10:08
#1
lettersofcredit
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you can reduce the presentation period

Scotty;

Normally, beneficiary's have 21 days after the date of the transport document to make their presentations. You can reduce this preiod to a shorter time -for example to 14 days or 10 days- if your customer accepts such a modification.

Regards,

International letter of credit consultancy services.

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Fri, 03/12/2010 - 10:24
#2
Scotty
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Bank Documents

Dear Sirs

Thankyou for you reply. My supplier will send a copy of the original docs to my bank for payment approx 3 days from shipping date. The shipping time for goods is approx 6 days. If I am to ensure that I have been paid by the end client prior to arrival of the goods I would have to present the documents that have been sebt to my bank to the end customers bank. Is there an agreement or general practice for doing this?

Regards,

 Scotty

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Fri, 03/12/2010 - 10:51
#3
lettersofcredit
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two seperate Letter of Credit Exist

According to my point of view, first of all one should need to understand that there are two separate letter of credit exist in your scenario. Your risk of non-payment is not link to your customer's non-payment risk. Nothing can prevent from your customer to correct the discrepancies within the time limits. This will not be changed even if your customer send the copies of the documents prior to its presentation.

Once the documents are accepted by your bank, you need to present required documents to the end buyers bank in order to get your payment.

As per my explanations, I am not aware of any kind of an agreement or general practice to settle this structurel conflict. More comments are appreciated.

May be you can think of a tansferable L/C. 

International letter of credit consultancy services.

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Fri, 03/12/2010 - 11:05
#4
Scotty
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Two Seperate Letters of Credit

Thanks again. Yes two seperate letters exist. I am the Applicant to the sellers and the Beneficiary to my clients. Both are transferable and the contract with the supplier is assignable however for reasons of confidentiality I do not want to assign the letter from my buyer to cover that of my seller. Is there some form of guarantee whereby the documents may be sent electronically with a guarantee that the original will be provided while still allowing payment to be recieved on the second LC ( the one where I get paid)?

Regards

 Scotty

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Sat, 03/13/2010 - 02:36
#5
phill doran
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electric shock

Hello Scotty

Although electronic presentation is permitted under the eUCP, your first thought must be whether it is permitted under the Exchange Control Laws of your buyer. You mentioned that they are in “Africa” and that is a very big place indeed, with many countries and many laws, but the general condition in Africa is that it is still paper driven and there is a good chance that payment may only be made on presentation of paper-based commercial (and thus the transport) documents.

Even if you get around this, the underlying physical endeavour should not be dismissed. How will you get around the short transit time if paper is called for? By the time you present, the vessel will be in and demurrage accruing.

Perhaps you might want to go back a step and see whether you have other banking options apart from this back-to-back arrangement and in this, whether you could then introduce waybills or express bills rather than bills of lading.

For example, why a standby and a credit? Why not just two standbys; with A (you) offering to B and C offering to A. Then waybills or bills of lading presented at origin (the so-called ‘telex release’). This option, and there must be more, (and more elegant) examples out there,  would present fewer problems than your present model.

Just some thoughts...

cheers

phill doran

"...in armour bright, the merchant men..." 

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Fri, 03/12/2010 - 14:21
#6
lettersofcredit
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electronic presentations

Electronic presentations are acceptable in letter of credit transactions since 2002. Electronic presentations are governed by eUCP rules, which are the supplement of the UCP rules.  eUCP Version 1.1. is the current version of the eUCP.

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