AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
Your Canadian bank issues a documentary letter of credit, usually under the ICC's UCP 600 rules, promising to pay the Nigerian exporter once it presents documents that match the credit exactly: typically the commercial invoice, bill of lading, packing list, certificate of origin and any inspection or health certificates. On the Nigerian side the exporter must register the shipment on a Form NXP and, under the CBN's 2026 Foreign Exchange Manual, repatriate non-oil export proceeds within 90 days.
A letter of credit (LC) suits a first or large order from a Nigerian supplier: shea butter by the tonne, sesame, cashew, cocoa products, textiles. You do not want to pay before you know the goods have shipped, and the supplier does not want to ship before it knows it will be paid. An LC puts a bank between you. It costs more and takes more paperwork than a wire transfer, but on the right deal it removes most of the trust problem.
How the LC works, step by step
- Contract. You and the supplier agree the goods, price, Incoterm, shipping date and that payment will be by LC. Name the documents you want.
- Application. You apply to your Canadian bank, which assesses your credit (an LC is credit exposure for the bank) and may ask for security or a cash deposit.
- Issue. The bank issues the LC, usually subject to the ICC's UCP 600 rules, and sends it to a bank in Nigeria, the advising bank, which passes it to the supplier.
- Confirmation, if wanted. The supplier may ask a bank to confirm the LC, adding its own promise to pay. This costs the supplier (or you, if agreed) a fee.
- Shipment. The supplier ships and collects the documents the LC demands.
- Presentation. The supplier's bank presents the documents. If they comply, the issuing bank pays, or accepts a draft for later payment under a usance LC.
- Release. Your bank debits you and hands you the documents, including the original bill of lading, which you need to collect the goods.
The ICC's eUCP 2.1, published on 29 June 2023 as a supplement and digital companion to UCP 600, allows credits to be handled with electronic documents. Ask your bank whether it issues eUCP credits; many trade transactions still run on paper.
The documents that trigger payment
Banks deal in documents, not goods. They check whether the papers match the LC's terms, not whether the shea butter is good. That is why you choose the documents carefully:
| Document | Why ask for it |
|---|---|
| Commercial invoice | Matches description, quantity and price in the LC |
| Clean on-board bill of lading | Proves shipment and controls the goods; see our bill of lading checklist |
| Packing list | Supports customs clearance in Canada |
| Certificate of origin | Supports the tariff treatment you claim at CBSA |
| Inspection or quality certificate | Independent check of quality and quantity before shipment |
| NAFDAC export certificates (food) | NAFDAC's export guideline lists a Health Certificate for processed food and a combined certificate of manufacture and free sale for registered products |
| Phytosanitary certificate (plant products) | NAFDAC's guideline says food exports need a copy of the NAQS phytosanitary certificate |
A discrepancy, such as a misspelt name, a late shipment date or a quantity outside the stated tolerance, gives the bank grounds to refuse. You can choose to waive it, but the supplier is then waiting on you. Keep the LC simple, and agree the exact wording of each document with the supplier before the bank issues it.
What the Nigerian exporter has to do
On the Nigerian side, an LC sits alongside the exporter's own obligations. Mondaq's summary of the CBN's e-Form NXP circular (2019) says the NXP is a requirement for commercial exports and is completed on the Trade Monitoring System with a valid tax identification number. Mondaq's note on the CBN's 8 January 2025 circular says exporters must repatriate proceeds into their domiciliary account and that banks may not accept late proceeds; that note's 180 days for non-oil exports has since been replaced, and under the CBN's 2026 Foreign Exchange Manual, effective 1 June 2026, non-oil proceeds are due within 90 days. An LC that pays promptly helps your supplier meet that rule, so expect sight LCs to be preferred. The Nigeria-side detail is in Form NXP and export proceeds rules.
Check the goods are exportable at all. The Nigeria Customs Service export prohibition list includes maize, rough or sawn timber, raw hides and skins, scrap metals, unprocessed rubber latex, and artefacts and antiquities.
Costs and timing
Your bank charges for issuing the LC, for amendments and for handling documents; confirmation and advising fees fall on whoever the contract says. These vary by bank and by your credit standing, so ask for the bank's trade tariff in writing. Allow time: issuing, advising, shipment and document checking can take weeks, and every amendment adds more.
Worked example
Example only: a US$40,000 order of shea butter, LC issued at a fee of 0.25% (US$100), one amendment at US$75, and document handling at US$150. Your bank costs come to US$325, or 0.81% of the order. Compare that with the cost of losing a US$40,000 advance payment.
When not to use an LC
For small or repeat orders with a supplier you trust, the cost and delay of an LC may outweigh the protection. Many buyers move to documentary collections or open account once a relationship is established; see how a Canadian business pays a Nigerian supplier and, for the buyer's side of the comparison, letter of credit vs open account.
Where Pryme fits
An LC is issued by your Canadian bank, not by Pryme. Where you pay a supplier directly instead, a Pryme business account holds USD and NGN, and the Finance agent can prepare the payment against the invoice for a person to approve.
Questions people ask
Who issues a letter of credit for a Canadian importer?
Your own Canadian bank, as the issuing bank. It sends the credit to a bank in Nigeria, which advises the supplier.
What documents does a Nigerian exporter present under an LC?
Whatever the LC lists, typically the commercial invoice, bill of lading, packing list, certificate of origin and any inspection, health or phytosanitary certificates.
Why would an LC payment be refused?
Because the documents do not comply with the credit, for example a wrong name, late shipment or quantity outside tolerance. The buyer can choose to waive discrepancies.
How long does a Nigerian exporter have to bring back export proceeds?
The CBN's 2026 Foreign Exchange Manual, as summarised by Mondaq, gives 90 days for non-oil exports.
Sources
- ICC: eUCP Version 2.1, supplement to UCP 600 (29 Jun 2023) · accessed Oct 2026
- Mondaq (Deloitte): CBN introduces e-Form NXP (14 Nov 2019) · accessed Oct 2026
- Mondaq: CBN suspension of time extensions for repatriation of export proceeds (7 Feb 2025) · accessed Oct 2026
- Mondaq (Pavestones): Key regulatory update, the CBN Foreign Exchange Manual 2026 (24 Jun 2026) · accessed Oct 2026
- NAFDAC: Guideline for export of regulated products (2018) · accessed Oct 2026
- Nigeria Customs Service: Export prohibition list · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.