Documentary Credit Practices:
Controversy and Guidance
Global Trade Advisory Ltd.
Senior Product Manager
Bank of China,
Head of Trade Products
ANZ Banking Group Ltd.
goVer Trade Technologies Ltd.
• SYMPTOMS: Previous comments on this topic from 2017:
• The majority of documentary problems are caused by:
– Poor drafting of the credit;
– Excessive and unnecessary data being added to documents;
– Lack of attention to detail and management of the production,
shipment and document collation processes;
– Lack of understanding of documentary credit workflows and the
principles of UCP 600
Step 1 – What is The Real Problem?
Parties do NOT understand the reason the LC exists:
Movement of Goods and Payment
• Simplifying UCP or Credits will not solve the lack of understanding of the
underlying process which the LC exists to facilitate:
• Applicant: Documents evidencing shipment of ordered goods; what the
typical documents are and how they work and what their content
• Seller: Assurance of timely payment through document prep and
• Banks: Financing and reimbursement
Step 2 – Why Do These Things Happen?
• Train your CLIENTS in LC basics:
– What is a LC, How Does It Work, Completing Your Application Form, Basics
of Creating Documents
• Train your STAFF in Issuance, Amendments, Document Examination,
AND HOW CREDITS and TRADE REALLY WORK
• Visit and where necessary Train FREIGHT FORWARDERS like you train
Step 3 – Treatment AND CURE
• Increase access to UCP and ISBP 745
– Applicants, Beneficiaries, Forwarders and BANKERS
• Take your staff on a trip to your Clients Factory, Port, Forwarders Office
• 50% of the problems apply to the presented documents: it is a justifiable
assumption that a greater understanding of ISBP 745 would help
alleviate these problems and greatly reduce this percentage
• It is very clear that significant attention must be paid to the
distribution of, and education in, “ISBP”
• AND WHY it Exists – this is a key issue moving forward
Step 4 – HOW DO WE GET THERE?