TT Reimbursement Allowed — What Importers Should Know

Intro

For importers, it’s important to be cautious about a “TTR” (telegraphic transfer reimbursement) clause in a Letter of Credit. This clause allows the negotiating bank to send a SWIFT request and get paid by your bank before the documents even reach you—and before you’ve had a chance to check them and use them to claim the goods. This can leave you exposed if there are problems with the shipment or the documents.

Let’s unpack what that really means, then explore how to safeguard your company.

QUESTION

Dear Mr. Old Man,

Our company is planning to open a Letter of Credit, but the exporter is requesting that the LC allow Telegraphic Transfer Reimbursement (TTR). Although we’ve done business with this exporter under FOB terms before, we’re concerned that with this clause, the negotiating bank might collude with the exporter to claim reimbursement via SWIFT before the shipment is actually made.

We understand the LC will require the beneficiary to provide a certificate confirming that one set of photocopied documents has been sent to us within two days after the shipment date. However, we’d prefer that the negotiating bank itself be required to send us a set of photocopied documents at the time they claim reimbursement.

Is this possible? If not, what can we do to reduce the risk associated with a TTR clause?

We would greatly appreciate your advice.

Thank you,

PM

___________

ANSWER

Dear PM,

Thanks for your thoughtful question — it’s one that pops up regularly when negotiating LCs with a TTR (Telegraphic Transfer Reimbursement) clause.

First, what does “TTR allowed” mean?

This clause permits the nominated bank (especially if it’s confirming the LC) to claim reimbursement by SWIFT from the issuing or reimbursing bank once it determines that the documents presented are in compliance with the LC. No need to wait for the issuing bank to receive and examine the required documents.

While this might raise eyebrows from the importer’s side, it’s actually a standard request — especially in confirmed LCs — and not uncommon or unacceptable in international trade practice.

Is the risk real?

Let’s address your main concern — that the negotiating bank might collude with the exporter to claim reimbursement before shipment is made.

Frankly, that risk is more theoretical than practical. Reputable banks won’t put their reputation, banking license, and correspondent relationships at risk just to play games with one LC.

Remember:

• The nominated/negotiating bank must examine and receive all required documents — not just one or two — and must be satisfied that the documents comply with LC terms before it can claim reimbursement.
• These documents include the transport document (e.g., original B/L), commercial invoice, packing list, etc. So, shipment evidence is already embedded in the LC document set — no need to add redundant requirements like a certificate of shipment or forwarder’s note.

Can you ask for photocopies before reimbursement?

Not really. It defeats the purpose of a TTR clause.

TTR is designed to allow faster reimbursement based on the bank’s own examination — not conditional on the beneficiary sending extra documents or on some form of double notification.

If you add such a condition, it creates confusion: is this still a TTR LC, or are we reverting to standard LC reimbursement?

Also, from a technical standpoint, the negotiating bank’s claim for reimbursement must follow presentation and acceptance of all documents, not merely a certificate or one piece of evidence. There’s no such thing as claiming reimbursement without having the full document set in hand.

What can you do instead?

• Trust the document trail: If your LC terms are well-drafted, and the bank adheres to UCP 600, reimbursement should only be triggered after compliant documents — including the transport document — are presented.
• Use digital tools for shipment tracking: Since you’re on FOB terms, you can always verify whether cargo has been loaded via shipping line websites, tracking apps, or by contacting the carrier directly. There’s no need to rely solely on banks or exporters for shipment evidence nowadays.
• If you’re still uncomfortable: You may negotiate with the exporter to remove the TTR clause. But if the exporter insists — especially when a confirming bank is involved — it’s better to focus on tight LC wording and using reputable banks rather than rejecting the clause outright.

Conclusion

To summarize:

• TTR clauses are not unusual and should not be considered unacceptable per se.
• Full document compliance is a prerequisite before any reimbursement is claimed under TTR.
• Post-shipment verification is now easier than ever thanks to shipping data and digital tools.
• Don’t ask for redundant photocopies — instead, make sure the LC terms are tight and that your issuing bank works with reliable correspondents.

Hope this puts your mind at ease.

Best regards,

Mr. Old Man