Textile Exporter Loses EUR 180,000 Payment on First EU LC: A Lesson in Documentation

Curated by Vinod Kumar Jain & Amit Jain · All Frontier Global · free, no login

India-Italy

Challenge

An Ahmedabad-based textile exporter received their first EU Letter of Credit from an Italian fashion brand for EUR 180,000 worth of printed fabrics. The LC was for a sight credit confirmed by ICICI Bank. Documents were presented on day 18 (within 21-day limit). The bank returned the documents with 4 discrepancies: (1) fabric weight on invoice 245 g/m² vs LC requirement 240 g/m²; (2) B/L notify party address missing postcode; (3) packing list showed 240 cartons vs shipping bill 241 cartons; (4) COO issued by chamber of commerce not EEPC as specified in LC.

Outcome

Payment ultimately received at full value. EUR 180,000 recovered without price reduction. 34 days of working capital tied up. EUR 2,800 in interest cost foregone. The exporter implemented a 20-point pre-presentation document checklist after this experience.

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