Five Tips on Writing a Letter Of Credit
As a document that is issued by an importer to a bank, a credit letter is purposefully sent to the bank of an exporter, instructing the recipients about the transference of an amount of money, in due process of certain obligations that are to be met by the exporter. However, there are various formalities and tips that are to be implemented in writing a credible and comprehensive letter of credit.
1. Letters of credit, being common procedures in the field of international trade, individuals or organizations are required to maintain a courteous tone at all times, despite any circumstances. If individuals or organizations are to deny any individual a credit, commence the collection process, or discontinue credit, they must maintain professional tones as they attempt to explain the reasons for implementing their specific actions. It is necessary for individuals or organizations to maintain courtesy because they may want to retain the customer(s) for any future businesses. It is important that, even though individuals may deny customers’ requests for credit, they should leave the door for future applications and interactions from the same individuals.
2. Like any other business letter, letters of credit should be brief and straightforward, without discussions of any trivial matter. It is important for individuals and organizations to maintain professionalism and portray a sense of business venture in their letter of credit. Tackling matters in a brief and straightforward manner enables the traders to interact in quick successions without having to go over misunderstood details in the letter of credit.
3. An important piece of advice on how to write letter of credit is the consideration of confidentiality. Individuals or organizations must provide an assurance to their readers that any information conveyed between the parties shall remain confidential. Confidentiality is a vital element in any business and more when dealing with international trade, individuals should be able to assure their partners in trade that all the private business details, such as the financial itineraries and appended signatures, are kept private.
4. It is advisable that individuals or organizations writing letters of credit are able to provide penalties. If payments are more than two months overdue and customers show no motive towards repayment of credit or discussing any possible reasons as to why they have not made any form of payments, letters of credit are then to clearly relay that their shall consequences of a penalty. Individuals should be able to follow up to this, so as not appear to have made empty threats.
5. Lastly, when writing a letter of credit, it is important to write it target-focused. By target-focusing, individuals are simply tailoring the letter of credit to their intended recipient. Tailoring the letter of credit enables the individual to easily comprehend and relate to the requirement and descriptions of the letter.