A documentary credit (also known as a letter of credit or L/C) is not only a vital tool enabling exporters to secure payment from overseas buyers, but should also provide a degree of certainty with regard to cash flow. The standard structure of the L/C includes timings for shipment and presentation, following which (assuming the bank determines [...]
(Updated 27th April 2017) It is estimated that around 70% of documents presented under documentary letters of credit are rejected upon first presentation to banks due to discrepancies (or apparent discrepancies). In 2007, the International Chamber of Commerce published the latest revision of its rules - "Uniform Customs and Practice for Documentary Credits, Publication 600", [...]
Having seen a significant growth in international trade during the last couple of decades, there has never been a greater opportunity within the financial sector to support exporting and importing companies of all shapes and sizes. In recent years, the major banks have resourced more international trade specialists in both front line sales and operations, [...]
How much thought do you give to the underlying contract delivery terms when requesting letters of credit from overseas buyers? The Incoterms® rules, published by the International Chamber of Commerce, define the responsibilities of seller and buyer in respect of cost, risk and other obligations whilst goods are in transit. Whilst these rules do not [...]
Who do you currently present your letter of credit documents to? Your own bank? Another preferred bank in your own country? Or…… are you being forced to deal with a local office of the issuing bank or their preferred correspondent? Consider completing and sending to your customer a Letter of Credit Request Template prior to the issuance [...]
Whilst a letter of credit is an excellent tool in terms of providing payment security to the seller and more certainty of shipment of the goods / provision of services to the buyer, it can also be very useful for improving cash flow for both parties. This factor is rarely considered by sales or purchasing [...]
In the current global financial climate, many internationally trading companies are turning to letters of credit as a means of securing payment from buyers in new or difficult markets. We regularly hear from internationally trading companies who are shocked by the level of letter of credit charges being deducted by UK based advising or confirming banks. Our popular Letter [...]
Non payment is a concern for any business. The problem is far greater in International Trade due to the fact that the supplier and buyer are located in different countries. The following are key considerations for companies who sell overseas: Will I get paid? Is the buyer creditworthy? Consider credit checks and trade references Do [...]
What is an Avalised Bill of Exchange? Bills of Exchange are widely used throughout the world for settlement of debts, however in their normal form they do not guarantee payment by the drawee (debtor). To obtain such a guarantee of payment it is necessary to have the bill guaranteed by a bank, normally the drawees [...]
Check that you have incorporated all costs, including bank transaction charges and confirmation fees (where applicable), into the final sales price. Ask your own bank for a copy of their trade services tariff. We have produced a guide to bank charges which you may find helpful. Please note that this is a general guide based on [...]
