Letters of Credit for Export

Stephen A. Jones ()
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Stephen A. Jones: AXS Trade Finance Ltd.

Chapter 6 in The Trade and Receivables Finance Companion, 2019, pp 73-94 from Springer

Abstract: Abstract The primary concern of a seller is whether they will be paid by the buyer for the shipment of goods. A letter of credit provides an independent payment undertaking of a bank, subject to the presentation of complying documents. For the seller, it is often said that ‘the documents are more important than the goods’. If the documents do not fully conform to the credit, this is known as a ‘discrepant’ presentation which at best can result in delayed payment and at worst in rejection of documents and no payment. This chapter discusses the optimum structure of the export letter of credit to mitigate risk for the seller and to provide a pre-shipment finance or post-shipment discount or negotiation solution. The same trading scenario is examined in Chap. 5 to illustrate the key differences in structure between an export and import letter of credit.

Keywords: Acceptance; Any bank by negotiation; Assignment of proceeds; Availability; Bank to bank reimbursement; Bill of lading; Cargo insurance; Confirmation; Contract of carriage; Control over the goods; Deferred payment; Discount finance; Discrepancy waiver; Discrepant presentation; Document rejection; Documentary risk; Documents; Export letter of credit; Letter of credit terms; Negotiation; Place of expiry; Presentation period; Pre-shipment finance; Reimbursement authorisation; Unconfirmed credit (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-030-25139-0_6

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DOI: 10.1007/978-3-030-25139-0_6

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