Many exporters receive letters of credit from their customers/buyers, without ever having given them an idea of what they require in the letter of credit. Because of this, many exporters are placed at the mercy of the buyer and the banks, as it relates to them being paid for their product. As a result, we have developed the following suggested guidelines for use by export clients.

1. The L/C should be an Irrevocable Documentary Letter of Credit, advised or confirmed by a U.S. Bank, and payable at the counters of the U.S. bank, upon presentation of documents in conformity with the terms of the L/C. Any L/C payable upon presentation at the opener's foreign bank, should not be accepted.

2. Beneficiary's name, address, city, etc. must be correct, exactly as shown on the L/C. Applicant's name and address must also be correct and should give physical addresses; not P.O. Box.

3. L/C should be for a specified amount, and should allow a plus or minus of ten (10) percent for freight and/or shipping charges, when terms are F.O.B., C. & F., or C.I.F.

4. Expiration date should be within a timeframe that will allow for actual shipment of the cargo from your facility, transport to the ocean port or airport, and placing of the cargo on the ship or aircraft. The expiration date should be at least 15 days after the "latest ship" date.

5. Normal documents which may be required to accompany the bank draft for payments under the letter of credit are:

     a. Full set, "Clean On-Board" ocean bills of lading or airwaybill, issued or consigned to
         _______________, marked Freight Prepaid/Collect and notify _______________.
         We recommend the bills of lading should be issued to "Order of Shipper" or "Order
         of (opening bank)."
     b. Commercial invoice, indicating terms of sale (as previously agreed), with further
         descriptive requirement for the goods being shipped.
     c. Packing list.
     d. Certificate of Origin, as applicable, may be required.
     e. Marine Insurance Certificate, endorsed in blank, for 110 percent of the C.I.F. value, or
         a statement "Insurance effected by the buyer" will be shown in the L/C.
     f. Additional documents, consular documents, etc. based on the ultimate destination of
         the cargo.

6. The L/C will state essentially, "evidencing shipment of (complete but short description of goods), as per pro forma invoice No. ______, (or contract No._______, or Order No. ____). Please try to keep the description brief, to insure clean documents.

7. Shipments should be allowed from any U.S. port/point, to a foreign final destination.

8. Latest Ship Date: __/__/__. Please make sure that when you receive the L/C, that there is sufficient time to complete production, packing, trucking, and vessel scheduling, to avoid possible amendments at the last minute. If you have questions about vessel schedules, frequency, etc., please call your freight forwarder.

9. Partial Shipments Prohibited. Transshipment Allowed.

10. We recommend that the L/C should specify, "All banking charges are for the account of the opener/applicant. Generally, you will pay banking charges in the U.S., while the buyer will pay those charges in his country. Note - U.S. banking charges can be very high. If in doubt, call the advising/confirming bank for a schedule of their fees.

11. As outlined in paragraph 1, if documents are accepted for payment upon presentation at a foreign bank, the exact address of the bank must be specified in the L/C and that documents are to be sent in one mailing via DHL, Federal Express, or other international courier.

One of the largest problems that exporters have with letters of credit is allowing the buyers to specify and select the freight forwarder that you, the exporter, must utilize. Understand that this forwarder is under contract to and paid by, the buyer. He will do everything possible to assist the buyer in getting the product timely. He is not concerned with getting you all of the documents necessary, to allow you to timely negotiate your L/C. This is not true of any and all freight forwarders, however, it is in your best interest to select your own forwarder. One with whom you have had experience, that is close to your location, and that will act to protect your interest, in timely preparing and presenting all the documents for negotiation. The sooner the documents are presented, error free, the sooner you will receive the proceeds from the transaction. Although this is your customer, remember your terms of sale and your traditional way of doing business and collecting your money.

We recommend that to our clients that any L/C received by them be immediately faxed to our office for our review and comment. If you have any questions regarding scheduling, documentary requirements, or others, we are always available to assist you.