Mr Old Man Payment Q&A DO THE CUSTOMER A FAVOUR? By Mr Old Man Posted on 2 days ago 3 min read 0 0 13 Share on Facebook Share on Twitter Share on Google+ Share on Reddit Share on Pinterest Share on Linkedin Share on Tumblr In the world of letters of credit, not every favour is straightforward — especially when the clock has run out. One reader recently wrote in with a dilemma that many banks have quietly faced: Should we “help” a customer by withholding a discrepancy, even when the presentation is clearly late? It’s a question of both procedure and principle. Let’s take a closer look. _______ QUESTION Dear Mr. Old Man, I would like Mr. Old Man to shed light on the following issue: We often advise LCs available by negotiation with the date and place of expiry is in our country. The issue is that the beneficiaries sometimes present documents to our bank after the expiry date 1 or 2 days and request us not to cite the discrepancy “late presentation” or “LC expired” to avoid discrepancy fee or being rejected by the issuing bank. In this case, we would help the beneficiary by shortening the five banking days of checking documents. I would like to hear your opinion as to whether we should do our customer such a favour? Thanks and best regards, T. ———– ANSWER Hi T., Thanks for bringing up a real-life scenario that does happen in many banks. I know some banks take the same approach as yours — using the full five banking days allowed for checking documents as a way to help their customers avoid the discrepancy “late presentation” or “LC expired.” These discrepancies may lead to fees or even non-payment by the issuing bank. But in fact, there is no need for a nominated bank to abuse the five banking day rule. To save the customer from a last-minute defeat, you can simply: – state in the covering schedule that the documents comply with the credit terms, – or say nothing at all about “late presentation” or “LC expired.” The issuing bank cannot reject the documents just because it suspects that they were presented after the expiry date — unless there is evidence. That said, intentionally covering up a late presentation is not encouraged. It’s best to be transparent and stay within the rules. Best regards, Mr. Old Man