The Document Flow of a Fuel Deal
Documents only make sense in order. Here is the sequence most serious buyers and sellers follow for EN590 diesel, Jet A1 or fuel oil cargoes:
- Letter of intent (LOI) from the buyer, showing interest and basic needs.
- Soft corporate offer (SCO) from the seller, a non-binding outline of product, price formula and terms.
- Irrevocable corporate purchase order (ICPO) from the buyer, accepting the offer terms, often with a bank comfort letter or proof of funds.
- Full corporate offer (FCO) from the seller, with full commercial terms.
- Sale and purchase agreement (SPA) signed by both parties.
- Payment instrument such as a documentary letter of credit or SBLC, issued bank to bank.
- Shipping and quality documents presented to the bank, followed by payment.
Real deals can skip or merge steps. Established companies often go straight from enquiry to a contract. What never changes is that the contract and the bank instrument carry the real weight, not the early letters.
Offer and Order Documents: LOI, SCO, ICPO, FCO
Meaning of ICPO
ICPO stands for irrevocable corporate purchase order. It is the buyer's written commitment to buy a stated product, quantity and price on the seller's terms. It normally names the product specification, quantity, delivery terms (FOB, CIF, TTT), price formula, payment instrument and the buyer's bank details.
Is an ICPO legally binding?
Despite the word "irrevocable", most ICPOs are treated in practice as a statement of intent. Whether one can be enforced depends on its wording and the governing law, and a court will look for a clear offer, acceptance and agreed terms. Treat the ICPO as an important step, but rely on the signed SPA and the bank instrument for real protection.
SCO and FCO
A soft corporate offer (SCO) is the seller's first, non-binding offer. A full corporate offer (FCO) follows a buyer's ICPO and sets out the complete terms for the contract. A real seller's offer names the company, the origin, the loading port or terminal and the inspection company.
LOI, RWA and BCL
A letter of intent (LOI) shows serious interest. A ready, willing and able (RWA) letter or a bank comfort letter (BCL) comes from the buyer's bank and confirms the buyer is a customer able to handle a transaction of that size, without committing the bank to pay.
The Sale and Purchase Agreement (SPA)
The SPA is the contract that turns talk into a deal. It should cover at least: product and specification, quantity and tolerance (for example ±5%), price formula and benchmark, Incoterms and delivery window, inspection company and method, payment instrument and timing, title and risk transfer, laytime and demurrage for vessels, force majeure, sanctions compliance, governing law and dispute resolution.
If an offer pushes you to pay or issue a bank instrument before an SPA exists, stop and check why.
Proof of Funds and Verification of Funds Letters
What is proof of funds?
Proof of funds (POF) is evidence that the buyer has the money to pay for the cargo. In fuel trading the usual form is a proof of funds letter from bank officers on the bank's letterhead, sometimes called a verification of funds letter, or a bank-to-bank confirmation.
What a real bank proof of funds letter usually shows
- The bank's official letterhead and address
- The account holder's company name
- Confirmation of available funds, or of the customer's ability to complete a stated transaction
- The name, title and direct contact of the signing bank officer
- A date and, often, a validity period
How to get a proof of funds letter
A buyer asks its own bank relationship manager for the letter, usually for a specific transaction and counterparty. Many banks will only confirm funds directly to the seller's bank, not on paper handed to brokers.
How sellers verify it
A careful seller confirms the letter directly with the issuing bank, using contact details found independently, not the phone number printed on the letter. A proof of funds that cannot be verified is worth nothing.
Letters of Credit and SBLC Meaning
What is a letter of credit?
A documentary letter of credit (LC or DLC) is a bank's promise to pay the seller once the seller presents documents that match the LC terms, such as the bill of lading and certificate of quality. Most LCs follow the ICC rules known as UCP 600.
What is SBLC?
The SBLC meaning is a standby letter of credit: a bank's backup promise to pay the seller only if the buyer fails to pay. In a fuel deal the buyer often pays by bank transfer against documents, and the SBLC sits behind that payment as security. SBLCs usually follow the ISP98 rules or UCP 600.
Types of letter of credit
| Type | What it does |
|---|---|
| Irrevocable documentary LC | Pays against compliant documents; cannot be cancelled without agreement |
| Confirmed LC | A second bank adds its own promise to pay, reducing bank and country risk |
| Standby LC (SBLC) | Pays only if the buyer defaults |
| Transferable LC | Lets an intermediary transfer part of the credit to the actual supplier |
| Back-to-back LC | A second LC issued on the strength of the first, used by traders |
| Revolving LC | Renews for repeated shipments under a term contract |
For more context on how payment fits a real deal, see our guides to EN590 diesel and Jet A1 fuel.
SWIFT Messages: MT700, MT760 and MT799
| Message | What it is used for | What it is not |
|---|---|---|
| MT700 | Issue of a documentary letter of credit | Not payment by itself; pays only against compliant documents |
| MT760 | Issue of a guarantee or standby letter of credit | Not cash; pays only if its conditions are met |
| MT799 | Free-format message between banks | Not a guarantee, not proof of funds and not a payment |
SWIFT is moving many messages to the newer ISO 20022 standard, so ask your bank which format it uses for trade finance. Whatever the format, only banks send these messages, bank to bank. A "SWIFT copy" emailed by a broker proves nothing.
Shipping and Quality Documents
| Document | Purpose |
|---|---|
| Bill of lading (B/L) | Receipt for the cargo, evidence of the shipping contract and document of title |
| Certificate of quality (CoQ) / analysis (CoA) | Test results against the contract specification |
| Certificate of quantity / ullage report | Measured quantity loaded or discharged |
| Independent inspection report (Q&Q) | Quantity and quality confirmed by SGS, Intertek, Saybolt or similar |
| Certificate of origin | Where the product comes from, key for customs and sanctions checks |
| Commercial invoice | The bill for the cargo, matching the contract and LC |
| Tank storage receipt / tank transfer documents | Proof of product in storage and title transfer for TTT deals |
| Letter of indemnity (LOI) | Allows delivery or payment when the original B/L is not yet available |
Red Flags in Fuel Trade Documents
- "MT799 proof of funds". An MT799 is only a message. It does not prove or block funds.
- SBLC leasing or monetisation. Offers to rent or "monetise" an SBLC for a fee are a well-known fraud pattern.
- Buyer POF demanded first, seller proof never shown. Both sides should be verifiable. One-way demands are a warning sign.
- Documents you cannot verify. Check every bank letter, tank receipt and inspection certificate directly with its issuer.
- Upfront fees. "Document fees", "dip test fees" and "processing fees" to unverified parties are how most fuel scams make money.
- Copy-paste procedures. Procedures that ignore Incoterms, inspection and the SPA are usually recycled from scam templates.
SBLC Meaning and Proof of Funds Letters from US Banks
SBLC meaning: a standby letter of credit is a bank's promise to pay if the buyer fails to pay. It is a backup guarantee, usually issued under ISP98 or UCP600 rules, and it is only paid if the seller shows the buyer did not perform. A normal letter of credit (LC) is the main way of paying for the cargo.
Proof of funds letter from a bank
A real proof of funds letter is issued by the buyer's bank on its letterhead, signed by a bank officer, and can be checked by calling the bank on a number you find yourself. US banks rarely send unsolicited MT799 messages for private deals; serious sellers ask for a bank reference, a verifiable letter, or an LC from a known bank.
US compliance basics
- Screen every counterparty, vessel and bank against OFAC sanctions lists before you share documents.
- Expect full KYC: company registration, beneficial owners and source of funds.
- Treat "leased SBLC" or "MT760 for a fee" offers as red flags; they are a common fraud pattern.
Educational information only, not legal or financial advice. Confirm with your bank and a qualified adviser.
Fuel Trade Documents: Frequently Asked Questions
What does ICPO mean?
ICPO stands for irrevocable corporate purchase order. It is the buyer’s written commitment to buy a stated product, quantity and price on the seller’s terms, usually sent after the seller’s soft corporate offer (SCO).
Is an ICPO legally binding?
In practice most ICPOs are treated as a statement of intent. Whether an ICPO can be enforced depends on its wording and the governing law. The real commitment in a fuel deal is the signed sale and purchase agreement and the bank payment instrument.
What is the SBLC meaning?
SBLC means standby letter of credit: a bank’s promise to pay the seller only if the buyer fails to pay. It works as security behind the main payment and usually follows the ISP98 or UCP 600 rules.
What is the difference between a letter of credit and an SBLC?
A documentary letter of credit is the main way the seller gets paid, against compliant documents. A standby letter of credit is a backup that pays only if the buyer defaults.
What is a proof of funds letter from bank?
It is a letter on the bank’s letterhead, signed by a bank officer, confirming that the buyer holds or can access the funds for a stated transaction. Sellers should verify it directly with the bank using independently found contact details.
What is a verification of funds letter?
A verification of funds letter is a bank letter that confirms a customer’s funds or ability to complete a transaction. In fuel trading it serves the same purpose as a proof of funds letter and must be verifiable with the issuing bank.
How do I get a proof of funds letter?
Ask your own bank relationship manager for a letter for the specific transaction. Many banks prefer to confirm funds directly to the seller’s bank rather than issue paper letters for brokers to circulate.
Does an MT799 prove funds?
No. An MT799 is a free-format message between banks. It does not move money, block funds or guarantee payment. Documentary credits use MT700 and guarantees or standby letters of credit use MT760.
What documents are needed to ship fuel?
Typical documents are the bill of lading, certificate of quality, certificate of quantity, independent inspection report, certificate of origin and commercial invoice, plus tank transfer documents for in-tank deals.
What does SBLC mean in fuel trading?
SBLC stands for standby letter of credit: a bank guarantee that pays the seller only if the buyer fails to pay. It is a backup, while a normal letter of credit is used to pay for the cargo.
How do I get a proof of funds letter from a bank?
Ask your own bank for a signed letter on bank letterhead confirming available funds. Sellers should verify it by calling the bank on an independently found number.
Do US fuel deals require OFAC screening?
Yes. Counterparties, vessels and banks should be screened against OFAC sanctions lists, and US banks will run full KYC before supporting a deal.