How the Letter of Credit delays your busines

How the Letter of Credit delays your busines

May 2022

From an engineering company in Rotterdam

“Recently, I had to prepare a shipment for India. It was a large piece of machinery, used in the oil industry, manufactured in our factory in Rotterdam. As always, it was my responsibility to arrange the financial security. After some emails and phone calls with my bank, I received the physical Letter of Credit (LC) a few days later.

The terms and conditions of the LC specified the shipping date of the machine. Due to a lack of parts in our workshop however, the machine was finished a few days later than planned.

The next transportation slot was 4 days later than the originally planned date of the LC. For this reason, I had to ask the bank to amend the LC. This wasn’t possible due to ‘internal processes’. The bank had to create a complete new LC.

By the time our next slot for transport was approaching, the new LC was still not signed-off by the bank. And, as ships don’t wait, we had to book another slot. To my surprise, we had to re-do the full LC request for a third time. In the end, it costed us 10 extra days to get the goods shipped.

Since December last year, we have started to use the Mercurion Trade Platform. It is easy and flexible. I don’t need to spend hours a day chasing banks. It was simple to convince our counterparties. I can really recommend it.“

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