From A to UCP

– Key Documentary Credit concepts explained

COVER2

Introduction

I have worked with documentary credits for more than 20 years. I have often heard the phrase that it is simply amazing how one working with documentary credits can continue to learn; that there is always new topics, angles or questions that pop up. Although I do not disagree with that, I find something else even more amazing: That it simply is the same questions, topics and themes that are still being discussed after 20 years – and in fact more than that. I am sure the individual documentary credit officer, specialist or expert learn – and do get more knowledgeable as time goes by. It seems however that the collective experience within the documentary credit community really does not grow.
Sometimes it even seems like it does the opposite: That these years the documentary knowledge disappears from the banks.

Here I will not elaborate on the reasons for that, only observe that this (as an example) can be verified when following the various discussions that goes on at the social media such as LinkedIn or Facebook. Some of the topics raised are so basic, and demonstrating that the person asking have had no structured training or background. This even applies to some of the Queries that are asked to the ICC Banking Commission, which indeed is very sad.

I of course always like a good discussion – and have the greatest sympathy for people who “dare” reach out to the masters for help; who “dare” to ask the silly questions. It does strike me however; how many times I have been answering the same questions.

One may argue that there are many books out there to answer the questions; and that is true. However – if one does not fully grasp the context it may be hard to identify the answer.

Let me explain: Many documentary credit books are structured based on the UCP 600; i.e. walking through the various articles; analysing and explaining them. In order to read such book one must (of course) have a basic understanding of the UCP.
Other books address the issue in a more holistic manner. One of the best (that I know) in this respect is “Documentary credits in practice” by Reinhard Längerich. It links all aspects of the documentary credit – and explains it in context. However; in order to get the full value from this approach, which in fact is rather complex, one must have a solid knowledge in advance.

This is the background on which this book has been written: An attempt to explain some key concepts of the documentary credit in a clear and simple manner. But not only that; also taking it out of its context – so that one can approach one concept when it is appropriate. The idea is to describe each of these concepts as short as possible (and present them in alphabetic order) – and primarily from the perspective of the documentary credit. In a few cases I have given a bit of a background – but in general the intention is to strip the concept down to its core!

It is my hope that this book will bridge the way to reading other textbooks – that will explain the concepts in a more holistic manner. I.e. that it will create an eagerness to understand and learn more … and above all cater for a more qualified discussion.

Kim Sindberg
Køge, April 2016

The following Documentary Credit concepts are explained in the book:

  • Advising bank
  • Amendments to the documentary credit
  • Assignment of proceeds
  • Availability
  • Back-to-back credit
  • Charter Party Bill of Lading
  • Collection basis
  • Confirming bank
  • Court interventions
  • Documents lost in transit
  • Drafts – Bills of exchange
  • Examination of documents
  • Franchise or excess (deductible)
  • Fraud in Trade Finance
  • Freight forwarders
  • Green clause documentary credit
  • Issuing bank
  • Language of documents
  • Movements (LCL, FCL, CY and CFS)
  • Nominated bank
  • On board notations
  • Original documents and copies
  • Red clause documentary credit
  • Refusing a presentation under a documentary credit
  • Revolving credits
  • Shipment
  • Signing of transport documents
  • Silent confirmations
  • SWIFT transportation fields
  • Title of documents
  • Trade terms
  • Transferable credit
  • Transport document issued “or order” versus “straight”

The book is available here

The book is also available as e-book.