FAQ: Documentary credits

When completing your draft, you should pay particular attention to the following: You will usually draw the draft on either the issuing bank or the reimbursing bank. You need not present drafts drawn on our bank (see field 42a if the documentary credit is sent by SWIFT).

The amount of the draft will usually be the same as the invoice amount, but the documentary credit could specify other conditions.

The "payable" field must state the time of payment (see field 42c if the documentary credit is sent by SWIFT):

1. If payment is to be made immediately: "at sight"

2. "XX days after sight "

3. The actual maturity date

4. If the draft is payable XX days after the date of despatch: the maturity date followed by "XX days after B/L date" or "90 days from date" (assuming the date of the draft is the same as the date of the transport document or on-board notation)

You must also remember to include the name of your company and sign the draft(s).

Here you can find a draft form you can fill out.

The description of goods in your invoice must agree with that in the documentary credit. In the other documents, a general description of goods is sufficient, as long as it does not contradict with the documentary credit.

In the case of direct transport from loading port to unloading port, the port shown in the documentary credit under "shipment from" or something similar must be stated in the field "Port of Loading" in the bill of lading.

If the documentary credit requires shipment from your country and it is necessary to transship in, say Hamburg, you state the name of the port in your country in the "Place of Receipt" field and Hamburg in the "Port of Loading" field. In such a situation, where there are two ships, the bill of lading must always be endorsed with an on-board notation - and if, as in the example, shipment from your country is required, the on-board notation must show loading in the port in question, stating the port name, ship name and date of loading.

Unless the documentary credit says otherwise, you must present at least one original of each of the required documents. However, if a document states that it is to be issued in more than one original, all the originals must be presented (typically bills of lading and insurance documents).

If the documentary credit does not stipulate who must issue a document and does not specify the content of the document, the bank will approve a document as presented. However, the bank will require, for example, that a weight list shows weights and that a certificate of origin shows the origin of the goods.

This does not apply for your invoice, transport document and insurance document.

This means that you must endorse a document: stamp and sign the reverse side of the document.

If the documentary credit says "about" in connection with the quantity of goods and/or price of the goods, it means that you may deviate up to 10% from the price and/or the quantity stated in the documentary credit.

"About" applies to the subsequent number. If "about" is next to the amount, this does not automatically give permission for a similar increase or decrease in the quantity, and visa versa. The amount and the quantity do not need to go together unless it is required in the documentary credit.

If "about" is placed beside both amount and quantity, you can ship less than stated in the documentary credit and at the same time invoice a higher amount than the documentary credit amount, unless the documentary credit gives a unit price.

Unless the documentary credit directly forbids the supply of more or less than the stated quantity of goods, you may deviate 5% from the stated quantity of goods, but you may not exceed the documentary credit amount. However, this rule is not valid, if the quantity is detailed as pieces or units.

If the documentary credit prohibits partial delivery and you cannot use the conditions stated above, you may ask for up to 5% less than the documentary credit amount if you ship the entire quantity and do not reduce the unit price.

If the documentary credit shows "maximum" in connection with the amount or a given quantity, it means that you may send any quantity and invoice for any amount up to a given maximum.

Unless the documentary credit states otherwise, you must present your documents to the Bank at latest 21 days after sending the goods - although you may never exceed the expiry date of the documentary credit.

If the documentary credit expires with a bank abroad, you must remember that the documents must be presented to us in good time before the latest presentation date or expiry date.

No, it is the issuing bank that decides whether the documents can be approved. The documentary credit is the guarantee for payment when all terms and conditions have been fulfilled.