1.LC advising: To confirm the authenticity of LC sent by Issuing bank
2.LC confirmation: If the exporter is uncomfortable with the financial standing of the issuing bank or the country of the issuing bank then the exporter can ask a bank in the exporter's country to add confirmation to the LC advised.
3.Transferable LCs: If the exporter does not manufacture the goods but sources them from another supplier then he can request for a transferable LC from the importer and then without having a credit facility transfer the LC to the supplier of the goods.
4.Pre-shipment finance: Upon receipt of purchase order, the exporter can arrange for financing from their bankers to manufacture the goods.
5.Negotiation/Discounting the bills under LC: After the goods have been shipped, the exporter can present credit compliant documents to their bankers. The bank will then discount clean bills or purchase the bill after receiving the acceptance from issuing bank depending on the arrangement with the exporter's bankers.
6.If the exporter does not use the Letter of credit option but open account terms then Invoice discounting is a good option wherein payment is received immediately instead of after the specified tenor.
Sunday, 25 April 2010
Tuesday, 20 April 2010
Impact of Southern Iceland's 'Eyjafjallajokull' volcano on International Trade Finance
On Importers:
1.Goods which have to be despatched through air could result in delayed shipment
e.g.Kenyan flower and vegetable producers are unable to export to Europe. In Italy, fresh-made Mozzarella cheese, highly perishable, can’t be shipped. FedEx, DHL and other shippers are grounded throughout much of Europe.
2.If goods have been despatched by any other mode than air, then documents will be delayed hence getting of goods will be delayed
3.Importers can incur high demurrage costs due to documents not reaching on time
4.Importers should explore the option of arranging for a delivery order with their bankers where possible.
On Exporters
1.Even if the goods have been despatched by any other modes than air then payment will delayed as documents are sent by air unless the LC has been confirmed and the documents have been negotiated and credit compliant
2.Warehousing cost can increase to the exporter
1.Goods which have to be despatched through air could result in delayed shipment
e.g.Kenyan flower and vegetable producers are unable to export to Europe. In Italy, fresh-made Mozzarella cheese, highly perishable, can’t be shipped. FedEx, DHL and other shippers are grounded throughout much of Europe.
2.If goods have been despatched by any other mode than air, then documents will be delayed hence getting of goods will be delayed
3.Importers can incur high demurrage costs due to documents not reaching on time
4.Importers should explore the option of arranging for a delivery order with their bankers where possible.
On Exporters
1.Even if the goods have been despatched by any other modes than air then payment will delayed as documents are sent by air unless the LC has been confirmed and the documents have been negotiated and credit compliant
2.Warehousing cost can increase to the exporter
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