6. Shipping documents are prepared and submitted to the Advising Bank by the Seller

When all details of the transaction have been decided, the goods are dispatched. The Seller then prepares the shipping documents and submits them to the Advising Bank. Preparation of Shipping Documents When assembling the documents for presentation to the bank, the Seller must make sure that the documents match the LC. The following must be ensured: 1. The Seller has the correct number of copies and originals Also ensure that they contain the information called for, that the title of all the documents is correct and they are issued by the party specified in the LC. The document name must match exactly what the LC calls for. 2. They are consistent with each other The shipping marks, quantities/weights, transport details, references and general descriptions must all be consistent to ensure that they clearly relate to the same shipment. 3. The description of the goods is correct Goods may be described in general terms in all documents except the invoice, where the exact LC description must be reproduced. 4. The documents are authenticated Import regulations in some countries require the documents to be signed manually and any alterations or additions witnessed. Submission of documents to the Advising Bank Once prepared, the shipping documents need to be presented to the Advising Bank without delay. Be aware of the following: • The documents must be complete and delivered to the bank by close of business on the expiry date and within the transport document time limit, whichever is earlier • The transport document time limit is 21 days from the date of shipment unless the credit gives a longer or shorter period • The import license expiry date is important and it may not be possible to extend • If any discrepancies are found and they can be put right, the corrected documents must still be presented to the bank by the original expiry date and within the presentation period. The following documents must all be in order. Transport Document Ensure these include the right type of transport, places and ports, have the correct consignor and consignee, date of shipment and ‘freight paid’ notation. Insurance Document Ensure that this is of the correct type, amount and currency as stipulated in the LC. The date must be no later than the date of issue of the transport document, unless the insurance document clearly states that cover takes effect from the date of shipment/receipt of cargo, ie. warehouse-to-warehouse. Invoice The Buyer and Seller’s names and details, the description of the goods and the clauses or statements must all appear exactly as they are in the LC. The value must not be more than the LC permits, though you can under certain conditions sometimes under-draw by up to 5%. A 5% variation is sometimes permitted, alternatively the LC may permit a specific variation such as an ‘about’ amount having a 10% variation. Bills of Exchange Ensure that the date, amount and currency are all correct, that the words and figures agree and that it is drawn on the correct party. Also check the endorsement, clause, and Letter of Credit reference number and ensure the signature identifies the signatory. Covering note/letter to Advising bank The note/letter must include the Seller’s contact details. Include a request that the bank notifies any discrepancies by fax or telephone rather than mail. Indicate how to be paid and include account details. Provide details if the Seller has a forward currency contract. Any other documents Ensure all other documents are from the correct issuer, have the correct wording and content, clearly relate to the goods invoiced and are all signed and endorsed as necessary. Also ensure that all communications are correctly set out, addressed and dated and that no documents are enclosed that are not required.

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