For AGV projects worth $100,000 to several million dollars, a standard Letter of Credit (L/C) can protect buyers from non-shipment risk. However, it does not automatically protect against late shipment, incomplete software delivery, unfinished integration work, or failed factory testing.

The real protection comes from how the L/C conditions are written.

Key Takeaway:
A well-structured L/C should be used as a project-control tool, not just a payment tool.

Why a Standard L/C Is Not Enough

Many buyers open an L/C requiring only:

• Commercial Invoice

• Packing List

• Bill of Lading

If the supplier ships on time, the bank releases payment.

The problem:

• ❌ AGV may not pass FAT

• ❌ Software may not be complete

• ❌ RCS licenses may not be delivered

• ❌ Integration functions may still be unfinished

Yet payment is released.

Beneficiary Certificates You Should Require

Factory Acceptance Test (FAT) Completion Certificate

Should include:

• AGV model numbers

• Serial numbers

• Test completion date

• Test results summary

• Supplier quality manager signature

Software Delivery Certificate

Should confirm:

• RCS software version

• License quantity

• User manual delivery

• API documentation delivery

Battery Compliance Certificate

Should confirm:

• UN38.3 compliance

• Battery serial numbers

• Battery manufacturer details

Spare Parts Delivery Certificate

Recommended when spare parts are included in the contract.

Can You Tie the L/C to an Independent Inspection?

Yes. This is one of the strongest protections available.

Payment under this Letter of Credit shall require submission of an inspection certificate issued by an independent third-party inspection agency confirming compliance with the purchase specification.

The inspection company can verify:

• Dimensions

• Lift height

• Navigation hardware

• Safety scanners

• Battery specifications

• Marking compliance

Independent Inspection in Nanjing

If the AGVs are manufactured in Nanjing, many buyers arrange a Pre-Shipment Inspection (PSI) after FAT and before container loading.

Typical verification includes:

• ✔ Quantity

• ✔ Serial numbers

• ✔ CE/ISO documentation

• ✔ Battery labels

• ✔ Safety equipment

• ✔ Packaging condition

How Much Shipment Delay Should You Allow?

Example:

• Contract Delivery Date: September 30

• Grace Period: 30 Days

• Cancellation Right: After October 30

This prevents suppliers from repeatedly extending delivery indefinitely.

Recommended L/C Cancellation Trigger

Buyer may cancel the order and recover funds if shipment has not occurred within 30 days after the contractual shipment deadline.

The exact period depends on project size and production complexity.

How to Link Software Delivery to Hardware Delivery

This is one of the most overlooked AGV procurement issues.

Many suppliers ship:

• AGV Hardware ✓ Delivered

• Software License Pending

Result:

AGV Arrives
↓
Cannot Operate
↓
Commissioning Delayed

Better L/C Language

Supplier certifies that all software licenses, activation keys, user accounts, and documentation necessary for operation of the AGV fleet have been delivered to Buyer.

Make this document a condition of payment.

Even Better: Contract Clause

Delivery shall not be considered complete until both hardware and operational software licenses have been delivered.

This provides legal protection beyond banking documents.

Additional Documents Worth Requiring

Packing Verification Certificate

• AGV quantity

• Charger quantity

• Battery quantity

Country-of-Origin Certificate

Helpful for customs clearance.

Compliance Declaration

Confirms:

• Product labeling compliance

• Battery documentation compliance

• Export compliance

Practical L/C Structure for AGV Projects

Required Documents

• ✔ Commercial Invoice

• ✔ Packing List

• ✔ Clean On-Board Bill of Lading

• ✔ FAT Completion Certificate

• ✔ Independent Inspection Certificate

• ✔ Software License Delivery Certificate

• ✔ Battery Compliance Certificate

• ✔ Country-of-Origin Certificate

Shipment Terms

• ✔ Latest shipment date specified

• ✔ Maximum 30-day extension

• ✔ Cancellation rights defined

• ✔ Penalty clause for excessive delay

Procurement Recommendation

For AGV purchases, don't treat the L/C as merely a payment tool.

Use it as a project-control tool.

Best-Practice Structure

✔ Independent third-party inspection before shipment
✔ FAT certificate required for payment
✔ Software license delivery certificate required for payment
✔ Shipment deadline with a clearly defined cancellation right
✔ Contract language stating hardware delivery alone does not constitute project completion

This approach protects buyers not only from non-shipment risk, but also from the far more common problem of receiving AGVs that arrive physically but are not yet ready to operate.