Procedures for Completing

To assist the exporter in eliminating costly amendments and expediting shipment, use the Export Letter of Credit Opening Instructions form (requires Adobe Acrobat Reader.) to provide the terms necessary for making shipment to your customer.

Applicant
Provide the complete name and address of the Applicant/Buyer.

Beneficiary
Insert the beneficiary's name and address as they will appear on the commercial invoice and other required shipping documents. Include a fax number or telephone number for contact when the actual Letter of Credit is issued and received by the advising bank.

Advised vs. Confirmed
Determine whether you feel comfortable with the country to which you are selling. A Letter of Credit is issued by the buyer's bank, which assumes the risk of the buyer (commercial risk), but unless confirmed, the seller assumes the country and political risk. When a Letter of Credit is advised, the advising bank (usually a U.S. Bank), will verify its authenticity and "advise" the beneficiary of the Letter of Credit. When confirmed, the confirming bank will assume the country and political risk. When requiring a Letter of Credit to be confirmed, ensure the confirming bank is a major U.S. Bank, not a foreign bank branch in the U.S.

Back to Top

Amount
Insert the amount and currency type for which you require the Letter of Credit to be opened. If you intend to add the bank charges and/or any other charges incurred into the amount of the Letter of Credit, be sure to reflect it in this dollar amount.

Available By
To enable Associated Bank to assist with the documentation examination process and expedite payment, check "negotiation with any bank." Even if the Letter of Credit is advised through a bank other than Associated, this allows any bank to handle your documentation and collect your payment. If the buyer requires term payment (30, 60, 90, 180 days), request the tenor be determined by the date of a document such as the Bill of Lading, Cargo Receipt, or Invoice. So many days sight means the number of days doesn't start until the bank responsible for making payment ensures conformity of the documents presented.

Please note that when agreeing to payment terms other than sight, the possibility may exist to accept or discount a draft providing a sight payment to the beneficiary.

Drafts would have to be drawn on the bank intended to accept and discount them.

Back to Top

Latest Ship Date
Indicate the latest possible date that you can ship the merchandise. If not given enough time, an amendment will be required or shipment will be made with the discrepancy of late shipment. This will cause a delay in payment and may possibly be a reason for the buyer to refuse payment.

Presentation
If not specifically indicated, the period for presentation of documents will default to 21 days from the On Board Bill of Lading date or date of shipping document.

Expiry
Usually determined after determining the latest ship date. If you require the standard 21 days for presentation of documents, the expiry date would then be latest ship date plus 21 days. The presentation period may differ, however, when specifically required.

Back to Top

Shipping Terms
Click here for a chart that describes shipping terms/incoterms (requires Adobe Acrobat Reader.). The proper shipping terms/incoterms should be marked in accordance with what you intend to pay for and take responsibility for when making shipment. When indicating a Marine/Ocean Bill of Lading, the Port of Loading and Port of Discharge must be exactly as indicated on the Letters of Credit. The Place of Receipt and/or Place of Delivery may be different and don't necessarily have to be designated. When requiring a Multimodal Bill of Lading (a transport document covering at least two different modes of transportation), the points designated on the Letters of Credit may appear on the Bill of Lading as Ports of Loading and Discharge or Places of Receipt and Delivery.

Partial Shipments
Partial shipments are allowed unless specifically prohibited.

Transshipment
Transshipment is allowed unless specifically prohibited. Transshipment means unloading and reloading from one vessel/aircraft to another during the course of carriage from the port/airport of loading to the port/airport of discharge. Even when transshipment is allowed and takes place, the ports named in the Letter of Credit must still appear as the Ports of Loading and Discharge on the Bill of Lading.

Back to Top

Merchandise
Briefly describe the merchandise being shipped, making reference to a purchase order or pro forma invoice. Try to avoid excessive detail or incorporating a copy of an order.

Documents
Indicate the documents required for the exportation of the merchandise. The most commonly required documents include a Commercial Invoice and Bill of Lading or evidence of receipt of merchandise. Additional documents may include a packing list and/or certificate of origin. Consultation with a reputable freight forwarder and/or customs broker may be helpful in this area. Indicate the consignment of the merchandise on the applicable Bill of Lading, freight collect or freight prepaid (according to the incoterm used), and then notify party. If the buyer requests an original, negotiable transport document be sent to him/her directly, and the goods are consigned to the order of the buyer, be aware that the buyer can then pick up the merchandise possibly before the documents clear banking channels. An option would be to agree to send a set of non-negotiable documents in advance to the buyer, or consign the merchandise to the issuing bank or to the consignor, blank endorsed and route the full set of originals through the banks. The Notify Party is typically the buyer or the buyer's freight forwarder/customs broker. FCA, FOB is usually freight collect. CFR and CIF is marked freight prepaid.

Back to Top

Bank Charges
When not specified otherwise, bank charges are for the account of the applicant. It is important to note, when receiving a Letter of Credit with time drafts, the drafts may be accepted and discounted allowing for payment to the beneficiary at sight. The Letter of Credit must specifically mention for whose account those charges are.

Special Instructions
If there are any additional conditions to be included in the Letter of Credit, please include them here.

Transferable: Indicate whether you require the Letter of Credit to be issued in transferable form. When a Letter of Credit is transferable, the beneficiary is most likely obtaining the merchandise from a third party and is assigning that party certain rights under the Letter of Credit. The transferable credit is an option to the less popular bank-to-bank Letter of Credit.

Revolving: A revolving credit is a Letter of Credit that is opened for the maximum amount of shipments to be made over a certain period of time which, after drawn upon and paid, the balance then is reinstated either automatically or upon notification but without need for an amendment.

Most Letters of Credit are issued subject to the Uniform Customs and Practice for Documentary Credits (UCP) as published from time to time by the International Chamber of Commerce. Banks engaged in the examination of Letter of Credit documents are typically well versed in the articles of the now UCP500. Determination of whether or not the documents presented comply to the terms set forth in the Letter of Credit is made by following the guidelines which exist therein.

If you have any questions, please feel free to contact the International Banking Department at 1-800-230-5506 (Mon-Fri 8:30am - 5:00pm CST).

Back to Top