Letter of Credit
"How do letters of credit work in Turkish international trade?"
Quick Answer
A letter of credit is a bank payment undertaking used in cross-border trade. Turkish banks typically follow UCP 600 and pay when presented documents strictly comply with LC terms. Most LC problems come from documentary discrepancies, presentation deadlines, and poorly aligned shipment terms.
How Letters of Credit Work in Trade With Türkiye
In an LC transaction, the buyer asks its bank to issue a letter of credit in favor of the seller. The seller ships goods and presents the required documents through banking channels. If documents match the LC terms, the bank pays regardless of buyer seller disputes about the underlying contract. This document driven structure is why LC drafting and document preparation matter as much as the commercial deal itself.
Key Points to Remember
- Lcs are document driven, banks check paperwork not goods
- Strict compliance is the rule, even small wording differences can trigger refusal
- Key LC terms to align are Incoterms, latest shipment date, and presentation period
- Common documents include invoice, transport document, insurance, packing list, and certificate of origin when required
Common Risks and How to Reduce Them
Most payment delays happen because documents do not match LC terms. Typical issues include inconsistent names and addresses, missing signatures or stamps, wrong Incoterms references, late shipment or late presentation, and transport document details that do not mirror the LC. A pre shipment document checklist and a draft review of the LC wording can prevent costly discrepancy fees and rejected presentations.
If a discrepancy dispute arises, the timeline for notice, waiver requests, and document correction is short. Coordinating quickly with the issuing or confirming bank and aligning contract remedies with the LC structure is usually decisive.
Need an LC Review Before You Ship?
We can review LC wording, align it with your sales contract and Incoterms, and build a document checklist to reduce discrepancy risk and protect your payment position in Türkiye related transactions.
Request an LC Review