UK Accounting Glossary
Preparatory advice that is given about a credit letter, usually given to the issuing bank from the advising bank, when time is of the essence. It is also referred to as the preliminary advice.
In letters of credit, at the request of an applicant, the issuing bank may give a pre-advice of issuance and/or amendment of the letter of credit. A pre-advice is usually marked with a reference such as “full details to follow”. Unless otherwise stated, the pre-advice irrevocably commits the issuing bank to issue/amend the credit in a manner consistent with the said pre-advice.
Also known as preliminary advice, pre-advice is preliminary information about a letter of credit sent by the issuing bank to the advising bank where time is short. It notifies the recipient that the named buyer has opened a letter of credit of a specified amount for a named seller (beneficiary), and usually includes the statement “the credit will follow” or words to that effect. Depending on the jurisdiction, a pre-advice may or may not irrevocably commit the issuing bank to issue the said line of credit. Therefore, the advising bank generally does not issue an advice of credit but only notifies the beneficiary of the receipt of preadvice so that he or she (if willing) may proceed with the processing of the buyer’s order.
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This glossary post was last updated: 8th December 2019.