Key Checks on the Day the Letter of Credit is Received
Before going any further…

• Check that the letter of credit states that it is subject to the 1993 revision of the Uniform Customs and Practice for Documentary Credits (UCP) of the International Chamber of Commerce, usually mentioning ICC Publication No. 500 (or perhaps “current revision”). Check the authenticity of the credit. Forgeries are comparatively rare, but dangerous. Credits are normally sent through an advising/confirming bank in the UK. Any departure from this routine should be viewed with suspicion, for example, if it comes to you direct from overseas. If it comes from a UK address asking you to send documents abroad and you do not recognise the UK bank, check its authenticity with your own bank. UCP 500 commits an advising bank to take reasonable care as to apparent authenticity of a credit (see UCP 500 Article 7) Nonetheless, if you receive an unexpected credit from a buyer unknown to you, even under cover of a seemingly genuine advice from a UK bank, check with the bank that everything is in order - particularly if it calls for goods direct to the buyer with only a PO Box number! Having assured yourself on these points, proceed with the key checks, bearing in mind, as mentioned above, that over half of credit documents are rejected on first presentation to the paying / accepting banks. The main reason for this is that matters which could have been put right, given time, were not put right because the credit had not been checked early enough. Making these key checks on the day the credit arrives, consulting other departments accordingly and carrying out the more detailed checks immediately afterwards, will enable difficulties to be spotted in better time to take action.
• Check that the type of credit gives you the level of payment security you sought. It may not be confirmed by a bank in the UK and may even be revocable i.e subject to cancellation without your knowledge. Credits issued under UCP 500 are irrevocable unless otherwise stated.
• Check that you will be paid at the time you planned. The credit may specify payment some time after documents and/or drafts have been accepted by the paying bank. Additional delays and other problems may arise if payment/acceptance is to take place abroad.
  
• Check that your company name and full title and those of the buyer are both correct.
  Check that you can produce the goods, ship them, assemble the documents required and deliver them to the bank, all by the expiry date and within the transport document time limit. The bank has no discretion under UCP 500 and is not in a position to pay after expiry dates, nor if the documents are not completely in order. If the credit has been sent electronically to a UK bank - “teletransmitted” - check that it provides details of the credit that you can act upon and that is not just a pre-advice. Unless is says otherwise, and provided it refers to UCP 500, it can be taken as the operative credit, can be safely acted upon and overrides any later mailed advice, since unless a pre-advice says otherwise, the issuing bank is bound to follow up the pre-advice by issuing the credit.
• Check that only those bank charges you agreed to pay are stated to be for your account. Be areful over bank reimbursing charges with a credit not expressed in sterling. If something is wrong, requiring an alteration or extension, complete the detailed checks below to see if there is anything else, then contact the advising bank immediately - it may e an error/omission on their part. If that is not the case, contact the buyer without further delay and then ensure that any necessary amendments are received in time. If an import licence must be extended, this can take some time. If the licence cannot be extended and a new one has to be obtained the delay may well go beyond the expiry date of the credit. At an early stage, it will be in your best interests to send a copy of the credit to your forwarder or whoever will obtain the transport documents. Similarly with your insurers if insurance is to be covered by you. Telephone instructions alone may easily result in mis-spellings and consequent rejection by the bank, or even a wrong type of transport or insurance document may be provided.

Source: www.sitpro.org.uk