Checkpoints before presenting an Insurance document to banks?

1. Description of Goods  is consistent with Invoice
2. Insurance is presented in the numbers required by the L/C
3. Insurance covered for atleast 110% of Invoice Value (Unless otherwise stated in the L/C)
4. Insurance is Blank Endorsed. (If the assured in neither the applicant or the issuing bank)
5. Insurance is issued on or prior to the shipment date
6. Insurance covers the clauses stipulated in LC
7. Insurance is countersigned (If required on its face)
8. Insurance is issued and signed by the Insurance Co., or Underwriters or their agents / proxies
9. Insurance does not contain a clause "subject to a franchise or an excess deductible" if not allowed in the L/C
10. Insurance mentions shipment route / place of receipt / port of loading and / or port of discharge / place of destination as per L/C
11. Insurance is not expired.
12. Insurance is covered in the currency of the Credit
13. Insurance claims are payable as per L/C requirement
14. Alterations on Insurance are authenticated
15. Cover Note is presented I/O Insurance Policy / Certificate
16. Insurance certificate/declaration is presented I/O Insurance Policy
17. If Insurance shows an expiry date, it evidences that the expiry date relates to latest date of loading or dispatch
18. Full set of original of Insurance is presented unless LC states where any original insurance document is to be sent.

Revised ISBP 745 - What's new? Look out this post for more details

Revised ISBP 745 is out and exporters/Importers and bankers should have started applying it on daily work.

What has to be checked on Certificate of Origin?

1. C/o not issued by the party mentioned in the L/C
2. Alterations are authenticated by issuer (If not issued by the beneficiary)
3. C/O indicates country of origin as per L/C
4. C/O presented in the numbers required by the L/C
5. C/O is dated and signed.
6. Gross weight/net weight/shipping marks/invoice value/quantity/shipment route in the is consistent with other documents
7. Invoice number and/or date is consistent with invoice
8. C/O is legalised, if required by the L/C

AWB - What should be checked before presenting to banks?

1. AWB is signed as per UCP(carrier and capacity of the signatory not identified)
2. Shipper/consignor's copy of AWB is presented
3. Air port of departure and destination in the AWB not as per L/C
4. AWB evidences "accepted for carriage"
5. AWB evidences flight date and no. (if called for in the L/C)
6. Alterations are authenticated by the issuer
7. NW/GW/Measurements are consistent with other documents
8. Consignee, notify party in the AWB is as per L/C 
9. AWB does not evidence charges other than freight charges (if not allowed as per L/C)
10. AWB mentions 'freight collect/freight prepaid'
11. Description of goods consistent with the invoice.
12. AWB is dated

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Incoterms 2010 chart

Uploaded a chart which will be very useful to understand new incoterms 2010

To download, click the below link

http://www.filefactory.com/file/4dtksrtr1guh/n/incoterms_2010_chart_pdf


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What has to be checked on Bill of Lading?

1. B/L is not straight consigned if L/C stipulates B/L to be consigned "to order" or "to order of ........"
2. BL is not consigned “to order” or “to order of…….” whereas LC calls for BL to be straight consigned
3. BL shows notify party as required in the L/C
4. B/L evidence port of loading/discharge as required by L/C
5. If “Received for Shipment" is B/L presented it bears a dated "Shipped on Board"  notation
6. If B/L shows place of receipt different to the port of loading, it bears a dated
7.  "Shipped on Board" notation which also states the name of the vessel and the port of loading BL evidences a ocean vessel.
8. On board notation does not evidence shipment in pre carriage vessel
9. If received for Shipment B/L is presented, it bears a issue date
10. B/L does not evidence that goods are carried on deck
11. B/L does not bear unauthenticated alteration(s) 
12. B/L states the name of the carrier
13. B/L states the capacity of the issuer
14. B/L is not claused does not show any defect in packing or goods
15. The NW/GW/Shipping marks and the measurement in the BL is consistent with the other documents
16. BL is endorsed as per L/C requirement
17. Attachments (if any) to BL are presented
18. B/L does not show intended port of loading/discharge/vessel (in case of marine B/L) – If it shows intended port of loading, then B/L should include a on board notation along with the name of the vessel, port of loading and date
19. B/L are marked "Freight collect"/freight Prepaid” as required by the L/C
20. Required number of originals are presented
21. B/L states the number of originals issued
22. Charter Party B/L is not presented (if not allowed in the L/C)
23. Description of goods in B/L is consistent with Invoice

 

Letter of Credit, UCP 600, Invoice, documents, import, export, doc checkers, doc checker, document checking, ISBP, Trade, International Trade, Best practices in trade, LC, DC, documentary credit, Incoterms 2010, ISP 98, URDG, URC, URR, Swift, Forfeiting, factoring, Bill of Lading, Ocean Bill of Lading, Invoice, Packing List, Certificate of origin, Insurance certificate

Factoring , Forfeiting & Bills Discounting

 Factoring　: A　factor, i.e. a commercial bank or a specialized financial firm, can assist an exporter with financing through the purchase of invoices or accounts receivable. Export factoring is offered under an agreement between the factor and the exporter, in which the factor purchases the exporter’s short-term foreign accounts receivable for cash at a discount from the face value, normally without recourse, and assumes the risk on the ability of the foreign buyer to pay, and handles collections on the receivables. Thus, by virtually eliminating the risk of nonpayment by foreign buyers, factoring allows the exporter to offer open accounts, improves liquidity position, and boosts competitiveness in the global marketplace.

Forfeiting: A　forfaiter　is a specialized finance firm or a department in banks offers non-recourse export financing through the purchase of medium-term trade receivables. Similar to factoring, forfaiting virtually eliminates the risk of nonpayment, once the goods have been delivered to the foreign buyer in accordance with the terms of sale. However, unlike factors, forfaiters typically work with the exporter who sells capital goods, commodities, or large projects and needs to offer periods of credit from 180 days to up to seven years.

Bills Discounting:　Business activities across borders are done through letter of credit. Letter of credit is an instrument issued in the favor of the seller by the buyer bank assuring that payment will be made after certain timer frame depending upon the terms and conditions agreed, it could be either sight, 30 days from the Bill of Lading or 120 days from the date of bill of lading. Now when the seller receives the letter of credit through bank, seller prepares documents and presents the same to the bank.

The most important element in the same is the bill of exchange which is used to negotiate a letter of credit. Seller discounts that bill of exchange with the bank and gets money. Discounting bill terminology is used for this purpose. Now it is seller's bank responsibility to send documents and bill of exchange to buyer's bank for onward forwarding to the buyer for the acceptance and the buyer finally, accepts bill of exchange drawn by the seller on buyer's bank because he has opened that LC. Buyers bank than get that signed bill of exchange from the buyer as guarantee and release payment to the sellers bank and waits for the time span will buyer will pay the bank against that bill of exchange.


Difference between Factoring & Forfeiting
In forfaiting, receivables are normally guaranteed by the importer’s bank, allowing the exporter to take the transaction off the balance sheet to enhance its key financial ratios. Forfeiting typically requires a bank guarantee for the foreign buyer. It allows opening an account in markets with relatively high credit risk. It is can be more expensive than commercial bank financing.

Difference between Factoring & Bills Discounting


Similarities:
Factoring is somewhat similar to bills discounting in the sense that both these services provide short term finance. Again discount account receivables which the client would have otherwise received from the buyer at the end of the credit period.


Differences:
Nonetheless, the two receivables financing arrangements differ in important respects.
Bill discounting is always with recourse whereas factoring can be either with recourse or without recourse.
In bill discounting the drawer undertakes the responsibility of collecting the bills and remitting the proceeds to the financing agency, while the factor usually undertakes to collect the bills of the client.
Bills discounting facility implies provision of finance and only that, but a factor also provides other services like sales ledger maintenance and advisory services.
Discounted bills may be rediscounted several times before they mature for payment. Debts purchased for factoring cannot be rediscounted, they can only be refinanced.
Factoring implies the provision of bulk finance against several unpaid trade generated invoices in batches; bill financing is individual transaction oriented i.e. each bill is separately assessed and discounted.
Factoring is an off balance mode of financing
Bills discounting does to involve assignment of debt as is the case with factorin