Business Letter Software

Archive for June, 2009

Business writing differs significantly from article or academic writing. Business communication is generally in the form of reports, policies, instructions, procedures, memos, letters, orders or rules & regulations. Memos are business letters but only for employees & used within an organization.

Memos are used to give information to employees such as changes in some procedures or rules, policy change or for specific purpose like request to attend a meeting. The format of the memo differs from business letter format. Memos generally contain sections like to, from, date, subject & text of memo.

Points to remember while writing a memo:
If you are sending memo to specific person, then you should write correct name of the reader. You can write job title along with name to make it more formal.

Subject should not be vague or unclear. It should be brief & specific, which can give an idea about the purpose of the memo.

Generally, memos do not contain salutation or complimentary closing.

The text in text section of memo should be concise, clear, to the point.

Avoid use of long and complex sentences that contain too much information. Short sentences make your message more readable and understandable. You can use headings & bullets to make your memo easy to read.

First paragraph in text area or opening paragraph should contain background of the problem & purpose of the memo. Memo’s recipient should get an overview of the memo by reading the first paragraph only.

In next paragraphs, you can explain the steps you have taken or methods and sources you have used to solve the problems.

Last paragraph should be the closing segment, where you can request your reader to take an action to solve the problem. Some people use conclusion at the end of memo to summarize the content. Conclusions are also useful for suggestions and recommendations or if you wish to make a request to the reader.

If there are any attachments, always mention at the end, after closing segment.

Always proofread your memo before sending it. You can use software programs, which are available for business writing, for proofreading & to check and correct English grammar & spellings in your memo. Some software programs enrich your text with adjectives & adverbs, which enhances the simple sentence into more professional and sophisticated one & suggest context related synonym for repeated words.

For information on business English writing software please visit
http://www.truevalue4money.com

By: Stephen Thomson

Technorati Tags: writing business, writing essays, writing outline

First things first, what is a cover letter? A cover letter is your way to be able to introduce yourself to the person who will be interviewing you in such a way that there is no need for you to give out a long monologue of your family history, academic background, and work experiences. A cover letter, to put it simply, is where you will be able to put in your career objectives in the company, this is your way of letting the interviewer know how interested you are in working for their company and how passionate you are about the available position.

To be able to do this you need to have the right cover letter format, there are a lot of people who just babble on and on in their cover letters and this can be quite a turn off for interviewers as they are not really interested in the nitty gritty details of the applicants’ lives. What they really want to learn about is how effective you will be for the company and how will you be able to communicate that to your interviewer? Through the right cover letter format of course!

For the right cover letter format that will help you pique the interest of the interviewer to consider your job or internship application, keep the language of your letter formal yet not too stiff. Just simply show the interviewer your professionalism by giving a letter that is business-like but don’t forget to make sure that you are able to send your point across. Be very clear with your motives and be able to impress the interviewer in your genuine interest in working in the company. Also, always be mindful to highlight your key skills that will prove to be an asset for the job or internship that you are applying for.

By: E Streat

Technorati Tags: business apology letter, business letter format, sample business letters

Start the letter by writing ”With reference to your letter dated - - - -.”

Did you just hear someone snoring? Yes, that is probably the guy reading this letter. Yawn.
Why start the letter in such a boring way? How about, ‘Thank you very much for writing to us’ and then continue the letter. We are so used to starting the letter with this line that we don’t even realize how redundant it is. And the person reading this letter has seen this sentence so many times that it makes no impression whatsoever. Trust me, the next time you write a business letter, drop this line.
Addressing the letter to Dear Sir/Madam
This salutation is used by people who are not sure who exactly they are writing to, and they want to play it safe. But in the process, they end up annoying whoever gets to read the letter, male or female.
Instead, why not do some research and find out. Usually, a quick phone or a search on the internet will answer this question. So make some extra effort to find out whether you are writing to a Mr or a Ms. Believe me, it will pay off.

Wheels on the bus Go Round and Round- - -

People like to take refuge in using long words to express simple thoughts, like playing a game of hide-and-seek.
There is a beautiful example in the book, ‘Business Communication Strategies’ by Matthukutty M Monippally. The book mentions that during the Second World War, a draft of an order was submitted to President Franklin D Roosevelt for his approval. Here is the draft:

Such preparations shall be made as will completely obscure all federal buildings and non-Federal buildings occupied by the Federal Government during an air raid for any period of time from visibility by reason of internal or external illumination. Such obscuration may be obtained either by blackout construction or by termination of the illumination. This will, of course, require that in building areas in which production must continue during the blackout, construction must be provided that internal illumination may continue. Other areas, whether or not occupied by personnel, may be obscured by terminating the illumination.

What?? Were you able to understand what was just said here? Go back and read it.
Still not clear? Well, it turns out that all the letter wanted to say that because of air raids, Federal buildings should not be visible at night. So in buildings which could afford to do, all lights should be turned off at night. And where this was not possible due to ongoing work, the windows should be covered with blackout construction.
President Roosevelt wrote this on the margin of the draft:
Tell them that in buildings where they have to keep work going, to put something across the window. In buildings where they can afford to let the work stop for a while, turn out the lights.
Moral of the story? In a business letter, use language that is simple, clear, and brief.

Using To: and From:

This one has been outdated since long, but you still find it lurking in business letters.
People continue to write To: before the name of the person who they are writing to, and put From: before their own name.
I just want to ask: Why? The person or company to whom you are sending the letter will recognize their own name, and they will know that the other name belongs to the sender. So why repeat the obvious!

Stating just the cold facts, with no personal touch.
It is true that business letters are used for professional communication, but still, they can always be enlivened by a personal touch. After all, you are still communicating with humans, and you can always use a human touch. Read this promotion letter.

Dear Jo:

This is to inform you that you have promoted to the position of Senior Manager, Logistics. Your promotion is effective from 12 March 2008 and you will be reporting to Ms. Susie.

Regards,

Hey, how about congratulating the guy? Compare it with this letter.

Dear Jo:
It gives us great pleasure to inform you that you have been promoted to the position of Senior Manager, Logistics, effective from 12 March 2008.
You will be reporting to Ms. Susie.

Pease accept our warmest congratulations on this well-deserved promotion. We are confident that you will bring the same level of dedication and commitment to this new profile as you have done in the past.

Congratulations and best wishes for your continued success.
Warm Regards,

Do you see the difference in the two letters? They both communicate the same information, but the second one is sure to touch an emotional chord.

Business letters that are more personalised always score over ones that are excessively cold, and formal.
So spend some time personalising when writing a business letter.

By: Business Letter Guru

Technorati Tags: business letter format, business letter writing, sample business letters

If you are in need of a home loan modification, writing a persuasive hardship letter could be crucial to your success. Generally, a lender needs to see a written communiqu that details the severity of your financial situation before he or she will proceed with a modification that can prevent foreclosure.
A hardship letter template may be used to convey the dire financial straights an individual faces when confronting: immediate foreclosures, loan modifications, forbearance agreements and other loan workout arrangements.
A quality hardship letter is effective at a very personal level. You are writing to another human being who happens to be your lender. You want the lender to be moved to help you get back on your feet in your time of financial distress, generally caused by factors outside of your control.
Legitimate reasons for getting a loan modification may include job loss, family death, long term medical illness, “act of God” disasters, etc. A lender will usually empathize with you if your letter affects them emotionally, thus moving them in a direction that they will be more likely to help you.
Your loan modification hardship letter template must explain how your present financial hardship was caused and the measures that you have taken to attempt to alleviate them on your own. You might cite how you have burned through your retirement savings to help right yourself financially. You might also explain that you have tapped out your goodwill by borrowing from family members.
You should be precise in your letter that your financial options have run out and that the only way that you can avoid foreclosure is if the lender acts. It is also important to state the immediacy of the need for the lender to act by a certain date or else you will have no alternative but to face a loan default.
Be clear in your writing of the mental anguish that you are suffering because of your present financial state. You need to make an impression that you are a genuinely responsible person who has fallen on hard times. To be effective, you need to describe in excruciating detail the personal affect your financial distress is having on your life such as high stress levels, lack of restful sleep and other discomforts.
Finally, provide the lender through your hardship letter template writing, the benefits that both of you will obtain if the lender proceeds to modify your loan. The lender is well aware that if you default, both of you will suffer monetarily by the foreclosure. Additionally, explain in the letter the constructive steps you have taken so that if the lender grants you a loan modification, you will remain current on your payments.

By: Anthony Fine..

Technorati Tags: business letter, financial hardship, mortgage loan

Before you actually write the e-book we are going to write the sales letter first. Now I suggest you write it in Microsoft Word and save it. Then we can transfer it to the main ‘Sales site Page’ when we are designing our basic site in step 5

The main reason we are writing our sales copy before we ever write a word in our e-Book is because it hasn’t actually being created yet, which means there is absolutely no limit what you can write in your sales letter. The sales letter doesn’t fit the e-Book; it’s the other way around.

Now you can describe exactly what your e-Book will show to the potential customer. There are no restrictions on what you can write in the sales letter. When the sales letter is completed you can then incorporate all the ideas you have come up with into your e-Book

Your sales copy must do the following three things

Get the attention of the prospects
Communicate the benefits of the product
Persuade the prospects into the desired action

Remember the most important part of your page design is your actual sales copy. A fancy website and graphics help but the key is in the words used

Sales letter Structure

Header/Title
Promises
Testimonial
Info product
Benefit
Bonuses
Guarantee
Summary

This is the structure that you should use for your sales copy. If you check out the best sales letter they will all follow this formula?

Header

The main function of the header/title is to grab the reader’s attention. The header should be displayed in a large, bold font. This demands your potential customer’s attention and intrigues them to read further on. Include your logo or e-Book cover (discussed later on) close to the header. If you header is not well designed you run the risk of losing the potential customer straight away. Spend time creating your header.

A Promise

This section promises the potential customer a huge benefit which is almost too good to be true. It’s ok if it’s a bit too unbelievable the testimonials will take care of that. Here is an example of such a headline

Discover how my 5 step affiliate programme can increase your income by 10,000 a month

Testimonials

In this section you include testimonials that old/new customers have sent you about your product or service. You probably don’t have any customers yet so email some potential ones your e-book for free in exchange for a testimonial. When you do start selling you can always ask a new customer for one.

Now the testimonials page has assured the potential customer that you can fulfil the promises you made in your header also you have gained a bit of trust from your potential customers so anything else you say that follows the testimonials page will be taken as true. This is the reason why the testimonial is placed at the top to gain trust right away where if it was placed at the bottom after presenting some good sales copy it may be already too late.

Info and product

In this section you will give info on what your product or service is about. You should show your customers a list of problems in this area. Agree with the customers, on how frustrating these problems can be and how you, yourself dealt with these problems. The key is to show the person that you have a deep understanding in this area and you are an expert on the subject. That is very important.

Next you must introduce your product as the solution to the problem. Then you must have a proper e-Book cover design. This is crucial. Many people have never purchased an e-book so you must give them some idea what exactly they will be purchasing

Benefit
This section is basically telling your potential customer of the benefits they will receive from purchasing your product. Show your potential customers the enjoyment they will get from using the product. Give them as much information on your product as you can. Use bullet points to emphasize the benefits. Put in another testimonial just to remind the person that it’s all true. Keeping their trust is highly important.

Bonuses

This is a powerful tactic used to increase sales. Including free bonuses with the purchase of your e-Book will increase the perceived value of the e-Book. Also a deadline on bonuses is also a good way to speed up consumer purchases. Bonuses also reduce the risk of money back returns

Guarantee

Offering a guarantee to your potential customers takes the risk off their shoulders. A good guarantee is the final bit in the jigsaw that will make the person finally purchase the product. The agreement is such that if the customer is not happy with their purchases then can get a full refund. You must remember that lots of your potential customers will be ‘first timers’ therefore a guarantee puts their minds at ease. Guarantees can be 30 day, 60 day, or lifetime; however such guarantees must be backed up with an exceptional product.

Summary

This is one of the most important steps in the sales letter; this is where you close the sale. In this section you must include your most appealing benefit and finally ask for the order, because if you don’t they wont. Finally make it easier for them to order like an ‘order now’ button shown below.

At this stage you should start to write your sales letter in Microsoft word we will concentrate on the html design and implementing the sales letter in it in section six but for now just concern yourself with writing your sales letter. To help you here are some of the web’s top e-book publishers sales sites. You can check out my own sales page at http://www.ebookprofitmaker.com

Sales Letter generator

Ok ill now offer you an alternative to writing the sales page yourself. Only use this if you are willing to spend some money. You may want to check out this piece of software that actually writes the sales letter for you. All you do is answer the questions it asks and you will receive your sales letter. You can find this software at sales generator here

Credit card Transactions

Finally you will need to find a credit card processor later on so your e-Books can be ordered. The one I seriously recommend is Clickbank. Ill go into them in more detail in section 6 but for now I want you to know that all these company’s, including Clickbank, have a set of rules that you must abide by to use their software. Don’t panic ill go through these rules now. Basically it involves putting a certain amount of details in your sales letter and product delivery page so you can be accepted by your credit transaction company. So here they are:

You must provide on your sales page:

Detailed description of your product
Buy now link
Explain how the product will be delivered
Mention how long the delivery will take

* remember theses are rules not suggestions

So that is everything you need to know on how to write your sales letter, hers a quick summary
We need to:

Write the sales letter before the e-Book
Sales letter structure must have , header, promise, Testimonial, info and product, benefit, bonuses, guarantee and summary
You can have your sales letter made by Sales letter generator
Certain set of rules should be included in the sales letter for the purpose of the credit card transaction company

By: David Hennebery

Technorati Tags: marketing letter, sales letter templates, writing sales letter

What is the main purpose of using a Sales Letters Software?

It walks you step-by-step through creating your own 100% completely customized sales letter.
people really need a software program that just walks them through the whole formula step-by-step.

When you’re done, it spits out a nicely formatted sales letter you can use on your web site. It’s only as good as the data you input. But it will walk you through it all and make it as easy as humanly possible. Even if you aren’t a good writer, you’re going to find sales letter software will amazes you.

What is the main benefit of your Sales Letter Generator Software?

The HEART of your web site is your sales letter. Look around and you’ll see very few people get or understand this. They have web sites that never use a sales letter anywhere. If they took their web site, printed it and mailed it out in direct mail, it would never make a dime. But what the software does is FORCE you to write a drop dead, killer sales letter. By that I mean it practically does it for you. You just follow the process, input the data and enjoy the result.

Am I guaranteed to make money with the sales letter produced by the software?

No. All business involves risk of gain and loss. If you can’t handle the potential for loss, don’t play the game.
You may not make a dime. And you may get rich. Chances are, you’ll fall somewhere between those two extremes. The sales letter is only one factor in your success.

What separates your Sales Letter Generator Software from the other how to products on the market?

The ad copy/sales letter software takes things to an all new level. No one has ever done something like this before. Certainly not in this software because the software employs a special proprietary ad copy formula.
No one else has that unless they ripped it off from the product,

Will the formula work for my product? It’s different.

Every product you can think of will work with this software. As long as you have to explain your features and benefits to potential buyers, it applies to you.

Will this write a sales letter for a lead generation business like mine?

Yes. It works for lead generation and direct product sales.

Why does it create a letter and not an ad? The letter format is what works because it’s personal. People want to buy from a person, not an impersonal entity.

By: matthew w faulkner

Technorati Tags: business letter format, sample sales letter, writing letters

When you receive an invitation for an event, you should know how to write a formal RSVP to an invitation. RSVP basically means please respond. Not responding would be considered rude, as your host took the time to send you an invitation.

Don’t think that it’s not important to learn how to write a formal RSVP to an invitation. Your gracious host needs your reply because they will have to count the number of people coming. To learn how to write a reply, read on!

1) Keep It Short.

It doesn’t take a professional writer to learn how to write a formal RSVP to an invitation. The rules are quite simple. First, keep it short. After all, you only need to confirm whether you are attending or not. Don’t write about anything more, as your host probably has more than a hundred RSVPs to sort out.

2) Follow Instructions.

Some invitations come with instructions on how to send your RSVP. Others prefer email to snail mail. Sometimes, the instructions also come with a specific date on when you can reply. If there’s no indication, try to respond as soon as you can.

3) Follow This Format.

The general format of how to write a formal RSVP to an invitation goes something like this:

‘Mr. and Mrs. Santiago accept with pleasure the kind invitation of Mr. and Mrs. Resella for Saturday, twelfth of November.’

If you are unable to attend, simply replace ‘accept with pleasure’ with ‘regret that they are unable to accept.’ Try to mirror the original layout of the invitation (words are usually centered) and use plain white paper. If you want to be truly formal, you can reply with a handwritten letter.

Although they don’t teach you how to write a formal RSVP letter to an invitation, it’s very easy to figure it out. Simply respect the way you have been given the invitation, learn to follow instructions and be as formal as possible.

By: Lee, Michael

Technorati Tags: destination wedding invitations, formal wedding invitations, wedding invitation sample

Searching for an effective cover letter format? Then look no further. In this article, I’ll reveal some excellent cover letter format guidelines that you can apply immediately in your job hunting pursuits.

A winning cover letter generally consist of three parts which amount up to three paragraphs.

In the first paragraph, you will detail why you are writing the company. This will provide context to your intentions for writing the company, which is to apply for a new job. Also, try to provide clues as to where you found out about the job posting and what got you interested in applying.

The second paragraph serves as the gist of your cover letter. Here is where you explain what you can offer and what skills matched the job requirement. If you have other skills or achievements, make sure to point them out by referring to your resume. Make sure you can convince them to read your resume.

The third and last paragraph provides means to follow up your application. You can slightly review what you have previously mentioned in the letter to provide more emphasis. You can also provide means for contacting you in case you are considered in the next phase of the application process.

More Cover Letter Format Guidelines:

1.Keep it brief and precise. Avoid exceeding one page.

2.Proofread your cover letter before submitting to ensure it is concise and written in a professional manner.

3.Check for grammar or typo errors.

4.Make sure you know what you are applying for so you can defend your claims in the cover letter during the interview.

5.Always end your letter professionally. As much as you try to learn how to write a winning cover letter, hiring managers also put a lot of weight on your level of professionalism.

Hope these cover letter format guidelines help you land your dream job. Best of luck to you and happy job hunting!

By: Lee, Michael

Technorati Tags: business writing, customer lette, good letter

Employers are always on the lookout for cover letters and resumes that jump out at them. Not in terms of being fancy and pretty to look at, but at least an attractive resume layout that’s easy to browse through in three seconds.

Although there is not one specific resume layout that applies to every resume, there are some basic rules to follow in achieving a great resume layout and crafting an amazing cover letter that would get noticed. Below are 3 cover letter tips followed by 3 resume layout tips that can help you land a job interview.

Cover Letter Tip 1 - Hit the Employer with a Cover Letter Headline That Would Stop Them Dead In Their Tracks

When crafting a cover letter, make yours stand out by adding an eye-catching, attention grabbing headline. Ninety-nine percent of all cover letters don’t have headlines. Most people write a very boring, run of the mill cover letter that ends up in the trash.

Take a look below at two sample headlines that would stop employers dead in their tracks:

Headline Sample 1: ‘You Are Going To Get Tons of Applications for This Awesome Job Offer, But Guess What…?’

Headline Sample 2: ‘If you hire the wrong employee you would be throwing away $15 an hour, 40 hours a week.’

Now don’t you think that those two headlines would make you curious enough as an employer to want to know more about this bold applicant who wrote this headline? You bet they will.

Cover Letter Tip 2 - Thoroughly research the company and personalize the first paragraph of each cover letter for the company you are applying to. You will stand above the competition and increase your chances of getting called for an interview because the employer will see that you took the time to get to know specific details about the company.

Cover Letter Tip 3 - Always focus on writing how you can increase the bottom line of the organization that you want to work for when crafting your cover letter

Your cover letter places you in the front lines when job hunting. It becomes your calling card. It let’s the employer know that you would like to set up an appointment for an interview to further discuss how you can be an asset to their organization. It is not about compelling drama or clever prose; it’s a simple page, expertly written, containing information that would show the employer how you would be an asset to their organization.

With that said, let’s focus on the resume layout. The look of your resume can be almost as important as what you have written on your resume. Although there is no single rule set in stone regarding an exact resume layout that would apply to every resume, there are some basic rules to follow when putting your resume on paper.

Resume Layout Tip 1 - Most resume experts claim that your resume should fit on one page. However, if you have extensive work experience, education, technical skills etc; you would need a two-page resume. You don’t have to force your long work experience on one page, and end up leaving out important highlights of your career.

If creating a two-page resume, make sure that you place your top selling bullet points on the first page of the resume. If you fail to highlight your top selling points on the front page and fail to grab the employer’s attention, they may never turn to the second page of your resume.

Resume Layout Tip 2 - Be consistent with the use of numbers and abbreviations.

Make sure you spell out numbers under ten and also including ten. If the numbers are over ten, use the numerical form. The only time this rule would not apply is if the numbers over ten are the first words in a sentence.

Resume Layout Tip 3 - Don’t everuse more than one font in your resume.

It’s best to stick with fonts that are proven to work like, Times New Roman and Palatino. Don’t change fonts for different sections. It’s best to keep your resume as conservative as possible.

So once you apply these simple tips you are on your way to landing the job of your dreams. Also, it’s best to print your resume using a laser printer because this way the ink won’t run if somehow the resume gets wet. Remember, in order to stand out, a killer cover letter and awesome resume with a simple but attractive layout can land your resume on the employer’s desk for an interview and not in the trash can.

By: Vermette Carbon

Technorati Tags: resume formats, resume samples, resume writing tips

Letter of credit (L/c) is a widely accepted and commonly used payment method in international trade. They are usually issued by larger banks and contain a promise to pay a seller (beneficiary) upon receipt of goods by a buyer if certain conditions outlined in the letter have been met.

There are three general principles governing the use of letters of credit:

1.The banks’ responsibility to deal in documents only;
2.the rule of strict construction, which dictates that the terms and conditions of the letter of credit are to strictly adhered to; and
3.the rule of independence, which mandates that the letter of credit is to be considered independent from the sales contract or any other agreement between the parties.

Put simply, the Issuing bank has two main roles:

To give a binding undertaking to the seller that if compliant documents are presented, the bank will pay the seller the amount due. This offers security to the seller
To examine the documents, and only pay if these comply with the terms and conditions set out in the letter of credit. This protects the buyer’s interests

Note that the letter of credit refers to documents representing the goods - not the goods themselves! Banks are not in the business of examining goods on behalf of their customers. Typically the documents requested will include a commercial invoice, a transport document such as a bill of lading or airway bill, an insurance document; but there are many others.

How secure is the L/c payment method ? Although an L/c is considered one of the most secure means of payment, exporters should understand that they can never totally control the payment process. Documents which are required to be presented under an L/c are frequently prepared by other people, and may not meet the strict compliance standards required by the banking community for payment. Sometimes banks which have not properly ensured their own reimbursement by customer (the buyer), apply very narrowly L/c principles to deny payment. Such denials have regularly been upheld by courts on grounds that the seller has not strictly complied with the terms of the L/c.

How to Secure your Payment ?

Like most other things in life -prudence, knowledge and certain precautions can greatly reduce your risk. Following are certain steps that an exporter can take to maximize his control of the L/c process

Knowledge is Power :

The rules governing L/c are codified in a publication sponsored by the International Chamber of Commerce (”ICC”), known as the Uniform Customs and Practice for Documentary Credits. Professionals advising exporters should have a good understanding of the UCP 500. The rules in the UCP 500 are drafted by and for the banking community. One of the major purposes is to protect the banks from liability in L/c transactions. The banks are providing a service - the financing of the transaction - and they expect to be protected from getting involved in disputes between the parties as to the terms of the contract of sale. For this reason “the independence principle” is a very important concept in LC transactions. This means that the LC, and the documents required under the LC for payment, are completely independent from the underlying transaction between buyer and seller.

The bank is not concerned if the contract between buyer and seller is being performed according to its terms. The bank’s only concern is whether the documents presented by the seller conform to the documents required under the LC, and whether the documents are presented within the required time periods. The bank employees who examine documents presented under the L/c are essentially clerks. Their job is not to make judgmentcalls, but simply to see if the documents presented by the seller/ beneficiary comply strictly with the documents required by the LC. It is therefore very important to understand the rules as a lack of knowledge may invite disaster.

Your choice of Issuing Bank

One way of securing some control on payment process is to choose a bank you know or familiar with. This implies that during negotiating seller should try to get the buyer to use a bank of the seller’s choice to issue the L/c. The seller should find out from his/her own bank, preferably a bank with a substantial international presence, what corresponding bank it uses in the country of the buyer. If the buyer can have the L/c issued by that correspondent bank, the process can proceed more expeditiously. At the very least, the seller should insist that the buyer use a bank that is well-known and highly regarded by the banking community. The seller’s own bank can provide information on the financial status and reputation of the foreign bank. Since a major purpose served by an L/c is that the issuing bank assumes the risk of the buyer’s insolvency, if the bank itself is financially weak, the L/c may not serve its purpose.

When in doubt - Get Confirmation :

If the seller is not comfortable with the bank of the buyer’s choice, the L/c should be confirmed by a prime world bank. When a prime bank confirms an L/c issued by a foreign bank, it takes upon itself the payment obligation. There is a charge for confirmation, which varies directly on perceived risk the prime bank believes it is taking in confirming the L/c. The question of who pays the prime bank’s confirmation charges is negotiable, but if not negotiated in advance the bank may charge the beneficiary.

Simple Documentation :

The seller should ensure during negotiation that as few documents as possible are submitted to bank, that documents should have simple description and all documents called for by the L/c can in fact be produced. Seller should avoid dependence on unknown or unreliable parties (e..g. if bank documents include a certificate from the government of buyer’s country or a signature from someone under buyer’s control - complications may arise).

Accuracy of Wording :

Accuracy of wording in respect of all documents to be submitted in bank is vital. For example, almost all L/c’s require production of a commercial invoice and a transport bill of lading. The invoice must state the description of goods in the same way as in L/c. If the goods are not described in exactly the same way, the seller may not be paid even though Bill of Lading may have correct wording.

Be sure what you are doing :

If seller realizes there is a mistake or a problem with the documents to be submitted in bank, the goods should not be shipped until the L/c is amended. The UCP 500 makes clear that no amendment can take place unless the issuing bank, the confirming bank, if any, and the seller, agree to it. Unless the seller has written confirmation from the bank that the amendment to the L/c has been issued, and the confirming bank has accepted the amendment, he bears the risk of not being paid.

A stitch in time…

A prudent seller should not let buyer take possession of goods until he has been paid under the L/c. The reason is obvious - if there are discrepancies in the documents preventing payment of the L/c, a buyer in possession of the goods has much less incentive to waive discrepancies so the seller can be paid. If the seller is not paid by the bank, the buyer still has a contractual obligation to pay for goods, but the difficulty of collection can make the price drop substantially, even assuming the buyer is solvent and can pay something. Particularly when the goods have been shipped to a foreign country, the payment collection can be quite costly. The buyer, knowing this, may attempt to negotiate a lower price (that is if he pays at all).

To keep goods out of the buyer’s possession till payment is settled, the seller should have the bill of lading consigned to order of the bank. Since the bill of lading is a title document, a consignment to order of the bank gives the bank title to the goods until they have been paid for by the buyer. Assuming proper payment, the bank transfers title to the buyer, who can then take the bill of lading and collect the goods. If buyer does not pay, the bank has an obligation to hold the documents for the seller, or return them to the seller if instructed to do so by the seller. The buyer should not be able to get the goods without the title document.

Look Before you Leap…

The buyer may ask seller to have the bill of lading made out to order and blank endorsed, and to send one or more sets to the buyer within a few days of shipping the goods. This is like writing a blank check. It enables the buyer to pick up the goods, and thereby provides him with a disincentive to waive any discrepancies in documents the seller presents to the bank. Given the high failure rate of initial presentations of documents under an L/c, a seller needs to know he will have the buyer’s cooperation in correcting discrepancies or in waiving them. The buyer’s cooperation will be more forthcoming if he cannot get possession of the goods until any problems with discrepancies have been resolved.

Know Your Deadline, for your sake…

Every L/c has three vital dates: the date by which goods must be shipped, the date by which documents must be presented, and the expiry date for the L/c. A seller should make sure that each of these dates can be met, and should allow a large margin for error. After the L/c has been issued, if the seller learns that the date for shipping goods cannot be met, he should not ship any goods until he obtains an amendment to the L/c permitting later shipment.

If an L/c which calls for transport documents does not contain a date by which documents must be presented, does this mean the seller can wait until the expiry date to present his documents? Not if he wants to be paid. Article 43 of the UCP 500 provides that if no time period after shipment is given in the Credit for presentation of documents, banks will not accept documents presented to them later than 21 days after shipment. An exporter unfamiliar with the 21 day rule of the UCP 500 could easily miss this deadline.

The exporter should make sure that the expiry date of the L/c permits sufficient time to permit correction, if possible, of any mistakes in the documents. Under the UCP 500, once the documents are presented, the bank has a maximum of seven days to let the beneficiary know if there are any discrepancies. If discrepancies can be corrected, they must be corrected and the documents resubmitted before the expiry date of the L/c. Thus the exporter should make sure that the expiry date allows enough time for errors to be rectified.

Finally - A Quick Checklist

Always make following checks with your L/c:

Did you receive the letter of credit directly from a bank? If your answer is “No” - do not proceed any further as the letter of credit has not been authenticated and may be fraudulent.
Is the letter of credit irrevocable? If your answer is “No”, do not proceed any further as a revocable letter of credit can be “revoked” by the buyer without your consent.
Has the latest shipment date passed? If your answer is yes, the letter of credit must be amended to extend the latest shipment date.
Is the letter of credit : Confirmed by a U.S. or prime world bank ? Please see above for correct procedure
Is the amount on the credit correct?
Is the beneficiary’s name and address correct?
Is the buyer’s name and address correct?
Is the merchandise description correct and consistent with other documents? .
Do any of the documents in the credit need to be legalized?
Which documents are required in the Letter of Credit:
oCommercial Invoice
oPacking List
oInsurance Certificate
oOcean Bill of Lading
oAir Waybill
oOther

By: Dr.Amit Kumar Chatterjee

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