By: Bill Ralph On: September 18, 2017 In: Letter of Credit Comments: 0

Letter of Credit mistakes can lead to delays or failed transactions.  With the large volume of letters of credit (LCs) that Techlantic processes, there are many Letter of Credit errors or submission mistakes we see commonly.  Here are the top 5 Letter of Credit errors or mistakes we encounter.

Error#1: “Ocean BL” instead of “House BL”

Many Letters of Credit request to use an “Ocean Bill of Lading” or “Master Bill of Lading”.  While this requirement is reasonable in principle, in practise it does not work.  Letters of Credit stipulate the format of the “Description of Goods” quite precisely, including the value and weight of each unit, the LC Number and date of issue, as well as terms like “Clean on Board”.  There are no ship lines that will print the value of the cargo they are moving because it opens the ship line to liability in the amount stipulated on the Bill of Lading, should anything go wrong.  Nor will they put a “Clean on Board” date on the BL, as this requires them to assert the cargo was “clean” (unscathed, immaculate) when loaded, and any incidental damage during transit becomes the responsibility of the ship line.

So, for these reasons, as well as a lack of functional space on the Bill of Lading to include all information required for the Letter of Credit, we are left with no choice but to use a “House Bill of Lading”.  This is the only way to ensure the correct information, in its entirety, gets printed on the BL.

Error#2:  Not Allowing “Trans Shipments” or “Partial Shipments”

Trans shipments should always be allowed.  There are only a few destinations in Asia where we can send a shipment directly.  There is no good reason why “Trans Shipments” should not be allowed as it is too limiting for the shipper.

“Partial Shipments” should also be allowed.  If only two cars are on the LC or we can get multiple (4+) cars shipped under the same booking on the same boat, we can argue it is not a “partial shipment”.   In most cases though LCs with four or more units are broken up based on delivery times to our warehouse, and may have to sail on separate ships. Ultimately it is up to the recipient/analyst at the bank and how they choose to interpret the LC requirements, however it is recommended to always allow partial shipments to provide flexibility.

Error#3: Unnecessary Administrative Steps

Some Letters of Credit that we receive stipulate administrative steps that do not impact the transaction.  A common one is when a Letter of Credit stipulates that Shipping Advice (a document with specific shipping details) be faxed to the applicant within X amount of days after shipment.  Curiously, these LCs often omit the fax number needed to fulfil this requirement, leading to an automatic “discrepancy charge”- Usually between $50.00 and $100.00 US dollars per discrepancy.  More importantly, adding hard to fulfil steps introduce a risk that there is a delay or refusal of payment which can jeopardize the order.

Another surprisingly frequent error occurs when an LC requires the repetition of the “Contract Number” on the commercial invoice and packing list, but there is no contract number to be found on the document.  This also leads to an automatic discrepancy charge.

The lesson learned is to keep the requirements simple.  Unnecessary administrative steps often lead to discrepancy charges and risk of payment delays or refusals that are wasteful and ultimately increase the cost of doing business.

Error#4: Typos, Missing or Inconsistent Information

Making spelling mistakes, omitting important information or including inconsistent spelling can cause delays.   Most commonly, we have encountered the applicants’ name or address omits certain details.  For instance, the Issuing Bank listed on the LC cover page may be spelled one way, while further on in the document it is spelled differently, with transposed letters etc.  Some additional research is required to determine the correct information.  Even then, we still get an automatic discrepancy from the bank.

Other things to avoid are incorrect or partial vehicle descriptions.  We once had a BMW X5 shipped under an LC that referred to it as an “X5” only.  Someone at the bank thought it was a guided missile used by the U.S.A. and reported it.  This caused a few weeks delay and a paid amendment was required for the description.

Other similar delays were caused by “SIENNA” instead of a “TOYOTA SIENNA” or “TOYOTA TURNDA” instead of “TOYOTA TUNDRA”.

Cars should be described as Manufacturer/Model/Sub model (if applicable).  For Example, “MERCEDES BENZ GLS450” is preferable to either “BENZ 450” or “MERCEDES GL”

Error#5: Submission Delays

Finally, there are often problems with submitting the documentation in a timely fashion to the bank.  All Letters of Credit have a “Submission Window” in which the banks expect the LC documents to be transmitted to the applicant’s issuing bank.  Many times, we do not even receive the LC before the units arrive in China, which leads to timing problems and additional storage charges for the applicant in China.  We ask that the LC be issued once the vehicles in question have been securely delivered to our warehouse and receiving images are shared.  At the same time, the Shipping and Handling payment should be transferred.


Processing Letters of Credit can be done smoothly if we work together.  Avoiding these common Letter of Credit Errors will allow your transaction to move forwards such that your vehicles can be released as soon as they arrive.  If you would like a complete set of Letter of Credit requirements to avoid all common Letter of Credit Mistakes please request using our form on this page.