FAQ
Confirmed or unconfirmed LC: which is better?
Confirmation reduces issuing-bank and country risk; it costs more but speeds up collection.
Difference between SBLC and a performance bond?
An SBLC is a standby payable upon conditions; a performance bond guarantees contractual performance.
Typical timelines for an LC?
2–4 weeks for set-up and confirmation, varying by bank/country and document complexity.
Who is responsible for document discrepancies?
The beneficiary must comply with LC terms; the issuer checks. A playbook reduces risk.
How do you handle high-risk/sanctioned countries?
Enhanced KYC/AML, up-to-date sanctions lists, and licensed partners only in suitable jurisdictions.
KYC/AML: what do you cover?
Policies, counterparty checks, payment flows and operational traceability.
Which Incoterms rule is best for LCs?
It depends on the transaction, but rules where the seller controls the main carriage (like CIF or CIP) often provide better alignment with the transport documents required by an LC.
How do you choose an issuing bank?
We assess banks based on their credit rating, jurisdiction, experience with the specific instrument (e.g., URDG 758), and fee structure to provide a shortlist of suitable partners.
When should a company start hedging FX risk?
A company should consider hedging when FX volatility starts to significantly impact profit margins. We help define a formal policy with clear triggers and thresholds.
What is a common use case for an SBLC?
A common use is to secure an advance payment. If the seller fails to deliver the goods after receiving the advance, the buyer can claim the amount back under the SBLC.
What is the financial impact of a discrepancy?
Discrepancies can lead to bank fees (typically €50-€150 per discrepancy), delayed payments (weeks or even months), and in the worst case, refusal of payment by the issuing bank.
What is the typical turnaround time for your advisory?
A preliminary assessment of documents and structure can be done within 2-3 business days. A full operational playbook is typically delivered within 2-4 weeks.
Advanced FAQ
Confirmed or unconfirmed LC: which is better?
Confirmation reduces bank/country risk and speeds up collection; it costs more and requires a confirming bank's appetite.
Difference between an SBLC and a performance bond?
An SBLC is a standby payable upon presentation of documents/statement; a performance bond secures contractual performance under URDG 758.
What are typical timelines for an LC?
Setup and confirmation 2–4 weeks; shipment and presentation per contract; sight or deferred payment as specified in the LC.
Who is responsible for document discrepancies?
The beneficiary must comply with LC terms; the bank checks compliance. A playbook and templates reduce risk.
How to avoid mismatches between Incoterms and the LC?
Align delivery term, insurance responsibilities, and required docs in the draft LC before issuance; ensure BL/CI/COO coherence.
Which documents are most critical for LCs?
Bill of Lading, Commercial Invoice, Packing List, Certificate of Origin; quality/inspection certificates if required.
How to choose the issuing bank?
Assess rating, jurisdiction, average confirmation times, costs, and confirming bank appetite in your markets.
Which fees should we consider (LC/SBLC)?
Advising, confirmation, negotiation/payment, amendment, swift; for SBLC also issuance/availability and periodic fees.
UCP 600, URDG 758 or ISP98: when to apply which?
UCP 600 for documentary credits; URDG 758 for demand guarantees; ISP98 for SBLCs unless otherwise agreed.
How do you handle high-risk or sanctioned countries?
Enhanced KYC/AML, up-to-date sanctions screening, licensed partners, and case-by-case legal/operational assessment.
Do you provide LC/guarantee training?
Yes: workshops on UCP/URDG/ISP98, document simulations, and operational checks for export/finance/logistics teams.
What SLAs can we expect?
Kick-off within 5 business days, initial deliverables in 2–4 weeks; specific SLAs agreed in the proposal.