Payment deserves clarification when it depends on meeting the conditions stated in a letter of credit, or when a pro forma invoice lists payment terms. The U.S. International Trade Administration says letter-of-credit payment is made to the beneficiary (exporter) provided that the letter’s terms and conditions are met.
Which payment triggers need clarification?
| Payment trigger | Why clarification is needed | What the buyer should check |
|---|---|---|
| Conditions stated in a letter of credit | Payment is tied to whether the letter’s terms and conditions have been met. | The exact conditions and what must occur for each condition to be considered met. |
| Payment terms listed on a pro forma invoice | A pro forma invoice can include a “Terms of payment” section. | The wording actually listed and whether it reflects the payment arrangement the buyer intends to accept. |
How should each trigger be checked?
For a letter of credit, the buyer should read the letter itself rather than assume that payment is unconditional. If any condition is unclear, the counterparty should explain what satisfying it means and what evidence will demonstrate that it has been met.
For a pro forma invoice, the buyer should locate the payment-terms section and check its wording. If the invoice and letter of credit both form part of the transaction, their descriptions of payment should be compared for consistency before acceptance.
What must the buyer still confirm?
The cited materials do not provide a universal list of payment triggers or establish the terms of an individual transaction. The buyer must still confirm:
- The exact terms and conditions in any letter of credit.
- The exact payment terms shown on any pro forma invoice.
- Whether the wording across the transaction documents is consistent.
- What event or evidence will establish that a stated condition has been met.
No clarification should be treated as complete until the intended payment wording appears clearly in the relevant transaction documents.