Uncategorized WHEN IS FINAL INVOICE FOR SHORTFALL PAYMENT MADE? By Mr Old Man Posted on March 9, 2012 4 min read 0 0 2,576 Share on Facebook Share on Twitter Share on Google+ Share on Reddit Share on Pinterest Share on Linkedin Share on Tumblr QUESTION Gd morning Mr Old Man, How’s your day? We opened an LC for 35 days after B/L date for Jet Fuel. LC called for Provisional Invoice due to pricing unable to determine at the point of presentation of docs.This set of docs has been accepted and paid on due date. (L/C closed) Subsequently, a Final Invoice presented for the shortfall payment as the pricing can now be finalized.L/C condition called for Final Invoice payment at “3 days after submission of Final Invoice” I’m not sure whether the Final Invoice should post under “Usuance” or “Sight” when this L/C has been closed and payment is in 3 days time. Need your expert opinion. Thank you!Jas ———————ANSWER Hi Jas, It is not easy to give a straight answer without seeing the L/C. My understanding from your description is that the L/C will be paid in two payments: the first payment is to be made against the provisional invoice at 35 days after B/L date, and the second payment is to be made against the final invoice for the shortfall payment (if any) at 3 days from the date of receipt by the issuing bank of the final invoice. Please note that the final invoice for the shortfall payment (if any) must be presented by the L/C expiry date. I wonder what if the actual price is lower than that of the provisional invoice. There will be no final invoice to be presented (?). Last but not least, please note that the applicant bears the risk of ambiguity in its instructions to issue or amend the L/C and the issuing bank should ensure that the L/C or amendment it issues is not ambiguous or conflicting with its terms and conditions. Best regards,Mr. Old Man—————————-COMMENT FROM JASMINE LEW Hi Mr Old Man, Thank you for your prompt reply.The reason for giving Final Invoice is because the Provisional Invoice unit price is an indicative rate which is lower than the Final Invoice unit price, hence the shortfall will be borne by applicant. Anyway, we have decided to pass the item as an acceptance bill so as not to affect the original term of ‘35 days after B/L date’ I’m so glad to know you as you have given me lots of explicit advice and opinion. Should have known you much earlier! Cheers, Jas ————————
IS THE NOMINATED BANK REQUIRED TO VERIFY WHETHER THE BENEFICIARY HAS AUTHORIZED THE PRESENTING BANK TO PRESENT THE DOCUMENTS?
CAN THE ISUING BANK CITE “LATE PRESENTATION” AS A DISCREPANCY SOLELY BASED ON THE DATE OF THE COVER LETTER?
IS THE NOMINATED BANK REQUIRED TO VERIFY WHETHER THE BENEFICIARY HAS AUTHORIZED THE PRESENTING BANK TO PRESENT THE DOCUMENTS?
CAN THE ISUING BANK CITE “LATE PRESENTATION” AS A DISCREPANCY SOLELY BASED ON THE DATE OF THE COVER LETTER?