A practical method to reduce discrepancies and shorten time-to-cash in LC operations.
1) Before issuance (contract & LC draft)
- Align Incoterms, delivery and insurance responsibilities.
- Agree issuing/confirming banks: rating, jurisdiction, average timelines.
- Define RACI for critical docs: B/L, CI, COO, certificates.
- Use measurable terms (quantities, tolerances, latest shipment, ports).
Contract checklist
- Clear payment terms (sight/deferred)
- Parties and banks identified
- Goods and delivery aligned with LC
- "No ambiguous wording" clause
2) LC text essentials (UCP 600)
- Avoid non-documentary conditions.
- Require obtainable documents within the presentation period (21 days unless agreed).
- Define latest shipment, place of taking in charge and presentation period.
3) Shipment & documents
- Align data across B/L, CI, PL, COO.
- Check on-board notation, dates and ports.
- Prepare a cover letter and complete document pack.
4) Presentation & follow-up
- Present within deadlines and keep receipts.
- Track discrepancies, waivers and bank feedback.
- Update the playbook after each case.
Common pitfalls
- Goods descriptions differ across documents
- Inconsistent dates (latest shipment vs B/L)
- Non-documentary conditions
- Insurance not aligned with Incoterms