Documentary credits exist to facilitate trade, not to hinder or obstruct.
The area of document examination carries most risk for any bank. A failure to identify one or more discrepancies will often result in delayed reimbursement and additional costs, or, in a worst-case scenario, a loss for the value of the drawing.
Having the requisite examination skills in each bank is essential to avoid such losses and any adverse impact on its reputation.
It should always be noted that the art of examination is not based on finding reasons for refusing to honour or negotiate a presentation. Unfortunately, all too often, there is evidence that indicates that this not always the default approach.
Upholding the integrity of the documentary credit product and the UCP is of value to all involved in the field of international trade finance. Handled correctly, the examination of documents is a valuable asset to both the beneficiary and the applicant, as well as the banking industry as a whole.
The examination of documents is based on a range of criteria:
It should always be remembered that "Document examination is an art, not a science".
A more in-depth study can be found in our module: Document Examination, Honour, Negotiation and Financing at https://www.tradefinance.training/shop/