| Key Stage 1. Importer & Exporter negotiate terms of the contract
- Name and address of the Importer's bank
- Status enquiry on the Importer. (Provided by one of Barclays
registered credit rating companies)
Standing of Importer's bank (Confirming Bank)
- Currency exchange rate fluctuation
- Risk of non-payment by Importer's bank due to country risk
(NB: Your Barclays contact can advise you about the banks and
countries Barclays are happy to confirm, together with the
Importers will need to request a specific bank facility for
Documentary Letters of Credit before any instructions can be
issued. In assessing the level of facilities required, you will
need to consider:
- The anticipated turnover. The facility will need to cover
the total value of LCs the Importer expects to have outstanding
at any one time
- The Importer's maximum potential period of liability. This
includes both the maximum validity period of the LC and the
maximum term of the contract. The Importer may need to allow the
Exporter some 'lead time' in order to organise the goods ready
- Currency exchange rate fluctuation.
To keep the costs of the transaction down, the Importer should
keep the validity period and any extended credit terms as short as
possible, thus reducing the overall level of facilities required.
- Delivery periods on goods
- Delays with particular goods (eg. through manufacturing
- Pre-shipment inspection.
- Methods of transport available, direct or indirect
- Frequency of departures
- Approximate costs of alternative methods/routes
- Type of packing
- Correct Incoterms (latest version) according to
- Optimum delivery point, ie. transported from where to where?
- Goods insurance
- Delays for consular work or inspection formalities.
Agreeing Terms of LC
To reduce unnecessary costs and delays in? Amending the Letter of
Credit after it has been established, we strongly recommend that the
Exporter sends the Importer a template of the terms and conditions
that they wish to be included.