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Letter of Credit Basics: Don't Grant Access to Your Goods Before You Get Paid

Chris Lidberg | May 20, 2019 | Export Finance

Unfortunately, once both parties agree to the method of payment, sellers frequently don’t give much thought to the actual terms and conditions that are contained in the letter of credit. This is a mistake, and it can lead to a world of problems.

As the seller, you should pay particular attention to the international bill of lading requirements in the letter of credit.

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My Checklist for Reviewing a Letter of Credit

Chris Lidberg | April 29, 2019 | Export Finance

I know there are companies out there that never look at their letters of credit (LC) until they are ready to present documents to the bank. Once they’ve received one from their customer, they assume it’s as good as gold and immediately put it away for safekeeping.

This practice sends shivers down my spine!

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Switching from Export Letters of Credit to Collections

Chris Lidberg | December 17, 2018 | Export Finance

In a previous article, Deciding on Approriate Export Payment Terms, I suggested that companies should perform an annual review of payment terms for each of their customers. A company’s creditworthiness and/or their country’s risk factors may improve or decline over time, and you may need to adjust their payment terms accordingly.

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8 Tips for Getting Paid with a Letter of Credit

Roy Becker | November 5, 2018 | Export Finance

For those of you who have worked with letters of credit in your export business, you know how complicated these transactions can sometimes become. However, if done the right way, getting paid this way has numerous advantages.

You could easily get frustrated if your letter of credit is delayed or not paid for any number of reasons. To help you avoid future frustrations and ensure a smoother process, follow these eight tips for using a letter of credit:

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Export Finance: Why Does It Take So Long to Get Paid?

Chris Lidberg | October 15, 2018 | Export Finance

You have shipped your product, payment is due, and the buyer claims they have made payment. As far as you can see, however, nothing has happened.

Does this sound familiar? I hope not, but if it does, let’s take a look at what might be causing the delay.

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Know the Risks of Using a Documentary Collection When Exporting

Roy Becker | October 1, 2018 | Export Finance

A documentary collection works well for many export transactions and provides a measure of security for both importers and exporters.

It provides security to buyers since they do not have to pay until they have documents, which provide proof of shipment. It also provides security to sellers since the buyer cannot receive the goods until he pays for them. Therefore, title to the goods remains with the seller until the buyer pays.

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The Hidden Expiration Date on Every Export Letter of Credit

Roy Becker | September 4, 2018 | Export Finance

The International rules for letters of credit, known as the Uniform Customs and Practice for Documentary Credits (UCP), state, “A credit must state an expiry date for presentation” (Article 6d). It is relatively easy to find the expiry date in the letter of credit.

However, another date equal in importance is referred to as the last date for presentation. The presentation period—the window of time in which the exporter must present documents—is tied to the ship date as indicated in the original transport document.

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Export Basics: Create a MAP to Grow Export Sales

Joseph A. Robinson | August 20, 2018 | Export Finance

It is now easier than ever for companies to reach potential export customers. By doing nothing more than hosting a web page and attending a few trade shows, even the smallest companies are reaching nearly as many potential international customers as only large multinational corporations could once afford to reach.

Even though it may be easier to locate potential international customers, that doesn’t automatically translate into a profitable, growing export business. You wouldn’t just hop in a car in a strange town and expect to find your destination without directions. Likewise, a company will quickly get lost in the world of exporting if it doesn’t know where it’s going and how to get there.

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3 Letter of Credit Lessons That Will Help You Avoid an Export Disaster

Roy Becker | August 6, 2018 | Export Finance

One of the core tenets of an export transaction is that your documents must comply with the terms specified in the bank’s letter of credit. Even one small discrepancy can give the buyer license to delay or refuse payment—even if the goods meet specifications. These are the rules detailed in the Articles of the Uniform Customs and Practice (UCP).

Here’s a true story of how a buyer of pool cues gamed the system to delay payments to the manufacturer in Taiwan. But it was the factory that got the last laugh when it shipped the late-paying buyer a box of tree branches instead of cues!

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If You Must Use a Letter of Credit—Get It Right!

Roy Becker | June 4, 2018 | Export Finance

Too often exporters receive a letter of credit and then become frustrated with the terms the issuing bank has provided.

They ask, “Why would a bank issue a letter of credit with terms and conditions like this?” The issuing bank does not arbitrarily set the terms.

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