How to Export with a Letter of Credit: Step by Step

Handled properly, a letter of credit converts a buyer's promise into a bank's obligation. Handled poorly, it leaves goods sitting at the destination port while payment stalls for weeks. The difference is rarely the credit itself; it is how the operation around it is planned. This guide walks through an export under a letter of credit from contract to collection. For the fundamentals, see our article on what a letter of credit is.

1. Fix the Terms in the Contract

The decisive choices are made before the credit is ever issued. The sales contract or proforma invoice should state:

• The type of credit: irrevocable, whether confirmation is required, and payment at sight or at a stated tenor.
• The delivery term, written as an Incoterms rule together with the named port or place.
• A latest shipment date that reflects realistic production lead times.
• The exact list of documents required and the number of originals and copies.
• How banking charges are split between the parties.
• Whether partial shipment and transhipment are allowed.

If these points are left open, the buyer will draft the credit to suit itself and the exporter is left requesting amendments afterwards, which costs both time and money.

2. Read the Credit Line by Line

When the advising bank passes the credit to you, review it against a checklist before starting production:

• Beneficiary details: is the company name and address exactly as registered?
• Amount and tolerance: does it match the contract, and is a percentage tolerance allowed?
• Goods description: is it precise enough to be reproduced verbatim on the invoice?
• Deadlines: do the latest shipment date, presentation period and expiry fit your production calendar?
• Document list: can every required document actually be obtained by you?
• Unworkable conditions: is anything dependent on the applicant's signature or approval?

If you find a problematic condition, request an amendment before shipping. Once the goods are on the water, your negotiating position weakens considerably.

3. Build the Production and Shipping Plan Around the Credit

A credit imposes three binding time limits: the latest shipment date, the presentation period after shipment (commonly 21 days unless stated otherwise) and the expiry date. Planning against the shipment date alone is a common mistake; the vessel can sail on schedule while document collection still overruns presentation.

Work the calendar backwards. Start at expiry, subtract the presentation period, subtract the days needed to obtain the bill of lading and certificates, and treat the remaining date as your shipment target. Freight booking, customs formalities and any pre-shipment inspection must fit inside it. Our logistics and supply chain service covers this planning in detail.

4. Prepare the Document Set

Payment depends on compliant documents. A typical set includes:

1. Commercial invoice: the goods description must mirror the credit exactly, with the correct amount and delivery term.
2. Bill of lading or transport document: shipper, consignee and notify party exactly as stated in the credit, marked clean on board.
3. Packing and weight lists: quantities and weights must not contradict any other document.
4. Insurance policy: for CIF or CIP terms, issued for the coverage and percentage required by the credit.
5. Certificate of origin: obtained and certified by the relevant chamber.
6. Analysis, inspection or quality certificates: issued by the body named in the credit, where required.

Consistency across documents matters more than correctness of any single one. The same goods description, weights, marks and shipment references should appear identically everywhere.

5. Presentation and Discrepancies

Once complete, the set is presented within the presentation period. Under UCP 600 the bank has a maximum of five banking days after presentation to examine the documents and advise the outcome.

If the documents comply

Payment follows at sight or at maturity depending on the type of credit, and the documents are released to the buyer for customs clearance.

If a discrepancy is raised

Three routes exist: correct and re-present within the remaining time; request the applicant's waiver if the deadline has passed; or convert the presentation to a documentary collection. A discrepancy does not necessarily mean no payment, but it does hand control back to the buyer. A clean presentation is the real objective of the whole exercise.

6. Common Failure Points

Choosing the right payment structure in the first place matters just as much; see our comparison of payment methods in international trade.

Coordinating It End to End

Exporting under a letter of credit requires production planning, customs, freight and document flow to run on one shared calendar. Yurt Bereket Global structures those elements as a single operation: matching manufacturer and buyer, defining the payment structure and delivery term, planning the shipment and preparing a document set that mirrors the credit. Yurt Bereket Global is not a bank, a law firm or an independent financial adviser; issuance, examination and legal interpretation rest with banks and legal professionals, while we manage the commercial operation.

You can read more on our secure international trade page or start a specific enquiry through our RFQ form.