Why is there a discrepancy in the documents?

Because the payment under the letter of credit is conditional on the conformity of the documents, the accuracy of the documents determines the smooth recovery of the export payment, and in practice, the refund of the purchase price with the punctual receipt can only be accounted for in the entire letter of credit transaction. A few. Some time ago, a foreign survey was conducted. The result shows that 70%-80% of the documents have discrepancies in the previous payment, and there is rarely a letter of credit to make a single order.

Since documents in the letter of credit have an unparalleled role, everyone involved in international trade knows its importance. Why are there so many documents with discrepancies? The analysis of this question helps us to prevent it in the entire L/C business process in order to minimize the occurrence of discrepancies in the document.

First of all, the more common cause of discrepancies is the limited business knowledge and operational negligence of the company's order makers.

In the past, because of the limitation of business scope, a company may have more business with Europe, and the business volume in the Middle East and other countries is not large, or the opposite is true, and the name of each region's credit; there are different characteristics, such as Europe. The letter of credit is more standardized. Most of the terms in the Middle East are more complicated. There are many documents required. Some documents are more unique. D?D determines that the salesperson is not familiar with all types of letters of credit. In addition, the customers of the general company are more stable, the terms of the letter of credit are the same or similar, and the production of the documents is basically the same, which leads to the limitation of the knowledge of the business of the ticket maker. Once the previous letter of credit appears, the business personnel often make the documents when they make the documents. There will be problems like this. In addition, the negligence of the order maker's system is also a factor that causes discrepancies. In the case of a small typing error, MINORDISCREPANCY is caused, and the negligence causes a substantial discrepancy. If there is a case, the letter of credit stipulates Shantou. Since Shantou is under the letter of credit, the same page cannot be opened. The issuing bank has put the word PTO in the later line. The company's system has not studied this. The word PTO is also included in the gimmick of the document, causing the issuing bank to refuse to pay. We know that PTO is the abbreviation of pleaseturnover, which is the "see the opposite side" of our Chinese. The discrepancies were caused purely because of the carelessness and incomprehension of the order maker.

Second, unfamiliarity or misunderstanding and negligence in international practices of shipping companies, insurance companies, commodity inspection agencies, etc. will also create discrepancies.

The documents issued by these departments are often important documents required by the letter of credit. If they do not match, they often have a great impact. I remember that when the UCP500 was first implemented, the bank had spent a lot of energy on negotiating with the shipping company on the issue of the identity issue of the bill of lading. However, there are still shipping companies that are not doing the same when issuing the bill of lading, such as some shipping companies. Use "asagentforcarrierOfB/Ltitle" or "asagentforthecarriershowedinB/Ltitle" when indicating identity, to the effect of "as the agent of the carrier as indicated by the bill of lading", by which it is inferred that the bill of lading and the name of the carrier indicate the name of the carrier, but often In addition to the name of the shipping company, the company does not clearly indicate that the company is the carrier. If it is technically considered from the letter of credit, the expression on the bill of lading causes the name of the carrier to not indicate the name of the carrier, and thus the documents of the issuer are paid. It has not attracted people's attention, but as a hidden danger, it is actually a license to the issuing bank.

Third, the analysis of the various situations that produce discrepancies, the defects of the letter of credit itself often lead to fatal discrepancies. This includes several situations;

1. The letter of credit contains soft terms. The soft terms prevent the exporter from performing the letter of credit or the documents required under the letter of credit, such as the letter of credit stipulated by the issuing applicant or other forms, and the applicant neither inspects nor issues the relevant certificate. The exporter is unable to submit this document, and the discrepancy arises. Even if the exporter provides such a certificate of inspection (ie, a forged certificate) according to the international practice of the bank’s exemption from the authenticity of the document, it is often fraudulent by the importer. Apply to the court for a stop order for the loan. Such clauses often make it difficult for exporters to operate in business operations.

2. The letter of credit itself is vague or contradictory. This is mainly because the issuing bank considers the negligence or deliberate cause of the incomplete or open applicant when issuing the letter of credit, such as the letter of credit requiring a full set of original bills of lading, while at the same time

3. The modification of the letter of credit may also cause discrepancies. Such discrepancies are often caused by the issuance of the issuing bank and the beneficiary's neglect of the review of the terms of the modified content. If the letter of credit is modified to change the bill of lading to the required air waybill, and the beneficiary proves that the relevant postal bill of lading has not been changed to a mailing air waybill; when the CIF price clause is FOB, the bill of lading is not changed from freiehlprepaid to freightcollect; The extension period is not extended; the insurance policy required by the letter of credit is not deleted when the CIF price clause is CFR or FOB. Generally speaking, the terms of the letter of credit are interrelated, and they must be moved in the same way. If only one of the clauses is changed and the other clauses are not amended, it will be inconsistent, resulting in the actual failure of the letter of credit to be executed. It was refused payment by the foreign issuing bank. The 1/3 bill of lading is directly mailed to the applicant. [Page]

4. The terms of the letter of credit conflict with the actual operation. In practice, some provisions of the letter of credit are often not implemented in practice. For example, in the transfer of letters of credit and back-to-back letters of credit, a clause is often encountered. “No documents other than invoices are allowed to have invoice numbers”, when the letter of credit At the same time, the GSP certificate of origin will be encountered, because according to relevant practice, the GSP certificate of origin must indicate the invoice number. Another example is the issuance of a certificate issued by the commodity inspection department. At the same time, a beneficiary certificate is stipulated to prove that the original commodity inspection certificate has been sent directly to the applicant for the issuance of the certificate; the commodity inspection department in China often only issues a genuine commodity inspection certificate, which makes the beneficiary very difficult, if the terms of the letter of credit indicate the original business certificate , the applicant can only send a copy, if the original is sent to the applicant, the original can not be submitted under the letter of credit, if the copy is sent, and the original business certificate and the beneficiary certificate that meets the requirements of the letter of credit are formed. The fraud of the card and the applicant.

Fourth, the disconnection of beneficiaries in the course of business is also an important reason for the formation of discrepancies.

The letter of credit is only a settlement tool. For the applicant for the issuance of the certificate, it is intended to regulate the beneficiary to perform the contract in a timely manner. As far as the letter of credit itself is concerned, it is particularly important to stock, produce and ship the goods according to the quality within the prescribed time. Some defects of the documents can be modified, but due to mistakes caused by the company's operations, such as the goods can not be produced within the specified time, resulting in short-loading, the ship can not catch up. The letter of credit stipulates that the inspection certificate issued by a certain department may not be changed if the company fails to obtain it due to negligence before shipment.

In addition, excessive trust in the bank is sometimes a factor in the formation of discrepancies. Many export companies often do not have in-depth management in their business, especially in the production and review of documents, but rely entirely on banks. Banks tend to accommodate customers from the perspective of providing quality services to customers. The long-term result is the company. The quality of business has not been improved. If the bank's business level and ability are high, it is safe and worry-free, but once you encounter a bank or bank manager who is not skilled, poorly-level, and has a low level of responsibility and a weak sense of responsibility, it is not optimistic.

In short, the reasons for discrepancies are multi-faceted. It is not just a discrepancy in the process of making a single order. The company's personnel, especially the senior management of the company, must understand this and work hard at every step of the credit and securities transactions. From negotiation to review of letters of credit; to production, storage and transportation, to order making, we must always pay attention to it and take precautions. Eliminating the discrepancies of documents depends on the efforts of all people in the whole process to be effective. Which specific link is difficult to achieve.

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