The differences between the preparation of documents and the provisions of the letter of credit are generally called discrepancies. Minor discrepancies, such as errors in a certain letter or punctuation mark, which do not cause ambiguity and have no substantial impact on the nature of the transaction, are generally accepted by the issuing bank, and only a few tens of dollars are deducted for each discrepancy. However, larger errors, especially those in quantity, amount, and delivery date, are serious. The issuing bank will notify the exporter (beneficiary) of the discrepancy and temporarily suspend the payment of the letter of credit. The beneficiary will only pay after the customer (the applicant) negotiates with the customer and agrees to accept the discrepancy and agrees to pay – and the discrepancy fee will be deducted. It can be seen that discrepancies will directly lead to the loss of guarantee of the letter of credit.
Generally, before delivering the documents to the foreign issuing bank, the domestic exporter’s bank (the letter of credit notifying bank) will pre-examine them at the request of the exporter and make timely changes if errors are found. However, at this time, the goods have been shipped, and many situations are fait accompli, and the discrepancies cannot be changed. At this point, provided that the customer is sure to accept it, you can “deliver documents without discrepancies”, bear the deduction for discrepancies, and complete the letter of credit. However, there are great risks in doing so. If the customer does not accept or changes his mind midway, the exporter will inevitably suffer losses. Therefore, be especially cautious when delivering documents without discrepancies.
If you do not trust foreign merchants very much, but have to “deliver documents without discrepancies”, the safe way is to ask the domestic bank to contact the issuing bank via SWIFT telegram, inform it of the discrepancies, and ask the issuing bank to contact the customer (the applicant) and ask the customer to confirm to the issuing bank that it accepts the discrepancies, and the issuing bank will then confirm with the domestic bank. This mode of operation is called “telegraphic submission of discrepancies”.