Letter of credit: what to check before you ship

A letter of credit (L/C) gets you paid by a bank instead of relying on the buyer, but only if the documents you present comply with the credit. Most problems are visible on the day the credit arrives, while there's still time to have it amended. This is a checklist for that day. It cites the article of ICC's Uniform Customs and Practice for Documentary Credits (UCP 600) behind each point, but it's not a legal reading of any particular credit; for that, ask your bank's trade finance desk.

Rules that apply

• UCP 600 (ICC Publication No. 600) is the rulebook most credits follow, and the credit should say so. As of late 2026 it remains in force; in 2026 ICC's national committees voted against starting a revision for now.
• ISBP 821 (2023), ICC's International Standard Banking Practice, explains how banks examine documents under UCP 600. It doesn't amend UCP 600.
• The credit's own wording comes first. UCP 600 fills in what the credit doesn't say.

Two principles shape everything below. A credit is a separate transaction from your sales contract (Article 4), and banks deal with documents, not with goods (Article 5). The bank won't care that the goods are perfect if the invoice spells the buyer's name differently from the credit.

The day it arrives: the checklist

• Subject to UCP 600? Look for the reference in the credit. A credit is irrevocable even if it doesn't say so (Article 3).
• Your name and address exactly as you use them on your documents. A mismatch causes discrepancies on every document.
• Amount and currency match your proforma invoice, including any deposit already paid.
• Expiry date and place. A credit must state an expiry date for presentation (Article 6(d)(i)), and presentation must be made on or before it (Article 6(e)). Expiry at a bank in your country is far easier than at the issuing bank abroad, where documents must arrive in time.
• Latest shipment date. Can you really ship by then, including production and booking? If not, ask for an amendment now.
• Presentation period. If the credit doesn't state one, documents that include an original transport document must be presented no later than 21 calendar days after shipment, and never after expiry (Article 14(c)). Some credits set a shorter period. Work out whether you can collect every document in time.
• Trade term and place match what you agreed, such as "FCA [terminal] Incoterms 2020". See which Incoterms rule to quote.
• Port or place of loading and discharge are the ones you'll actually use.
• Partial shipments and transhipment. Partial shipments are allowed unless the credit prohibits them (Article 31(a)). Transhipment rules for bills of lading are in Article 20(c). If you might ship in two lots, or your route involves a transhipment, check the credit doesn't forbid it.
• Goods description. The invoice must match it. Keep the credit's wording short and in your product's real terms; long specifications copied into a credit create discrepancies.
• Every document required, and who must issue or sign it. Check each one, below.
• Additional conditions (often in field 47A of the SWIFT message). These are easy to overlook and are a common source of discrepancies.
• Charges. Who pays which bank's fees, including any confirmation fee.
• Confirmed or not? See confirmation below.

The documents, one by one

All documents must be consistent with each other as well as with the credit. ICC's guidance lists inconsistent data between documents, late presentation and expiry, and errors in invoices and transport documents among the most common discrepancies.

Amounts and quantities: the tolerances

• If the credit says "about" or "approximately" before an amount, quantity or unit price, that allows up to 10% more or less (Article 30(a)).
• Where the quantity is not stated in packing units or individual items (for example, tonnes of a bulk product), a tolerance of 5% more or less on quantity applies, as long as you don't exceed the credit amount (Article 30(b)).
• If your production run can vary, ask for "about" to be added before you start, rather than hoping to stay exactly on the number.

Confirmed or not

An unconfirmed credit is the issuing bank's promise only. A confirmed credit adds a second bank's own undertaking to pay (Article 2 and Article 8), usually a bank in your country. Confirmation is worth asking about when you don't know the issuing bank, or when the issuing bank's country carries political or currency transfer risk. It costs a fee; agree in advance who pays it.

Ask for amendments early

If any item on the checklist doesn't fit what you agreed or what you can do, ask the buyer to have the credit amended before you produce, not after you ship. Be specific:

Subject: L/C [number] for order [PO number]: amendments needed before production

Dear [name],

Thank you for opening L/C [number]. We have checked it against our proforma invoice [number]. Please ask your bank to amend these points:

1. Latest shipment date: [current] → [requested], because [reason].
2. Expiry date: [current] → [requested] (at least [21] days after the new shipment date).
3. Field 46A, inspection certificate: please change "signed by applicant" to "issued by [independent inspector]".
4. [Any other point.]

We will start production when we receive the amendment.

Best regards,
[name]

Write it plainly enough for a translation tool; see plain English for non-native buyers. If production slips later, the shipment and expiry dates will need another amendment; see telling a buyer about a delay.

When you present the documents

• The bank has a maximum of five banking days following the day of presentation to decide whether the documents comply (Article 14(b)).
• If it refuses, it must give a single notice stating each discrepancy, no later than the close of the fifth banking day after presentation (Article 16(c) and (d)).
• If the expiry date or the last day for presentation falls on a day the bank is closed, it's extended to the next banking day (Article 29(a)), unless the bank is closed for force majeure reasons listed in Article 36. Bank holidays at the presenting bank count; see working weeks and holidays.
• Present early in the presentation period, so there's time to correct and represent documents before expiry.

A letter of credit narrows the room for payment fraud, but check that the beneficiary account in any instructions is really yours, and never accept "new" bank details by email; see bank detail change fraud. For how a credit compares with deposits, collections and open account, see export payment terms compared.

Sources

• ICC, Uniform Customs and Practice for Documentary Credits (UCP 600), Articles 2, 3, 4, 5, 6, 8, 14, 16, 20, 29, 30, 31 and 36. The ICC Digital Library is a subscription service; some pages may ask you to sign in.
• ICC Academy, ISBP for practitioners (ISBP 821, the 2023 revision) and Avoiding common L/C discrepancies.
• U.S. International Trade Administration, Trade Finance Guide, chapter on letters of credit.
• GTR (trade press), Banking Commission to focus on education after vote against rulebook revision, 29 April 2026.

Read next

• Export payment terms compared; all of Getting paid.
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• Fake inquiries and phishing, in Fraud and safety.
• Quoting and trade terms; Working across markets. How we check sources: about this handbook.