When deciding whether or not to request a LC, some considerations might include:

The costs associated versus the risk of non-payment, as well as which party will incur these costs.

Legal requirements and expertise required.

Documentation needed (for proof of delivery, sending the goods across e.g. customs declaration and insurance documents).

The supplier / customers creditworthiness.

Overseas Business:

International traders or wholesale producers of goods are the primary users of Letters of Credit. These types of company need to be certain that they will not suffer losses from selling to overseas buyers that they are unfamiliar with.

In the unfortunate case that the recipient of the goods is unwilling or unable to pay the seller, the LC is activated, and under the terms of the agreement, the bank will be obliged to cover the missing payment. After the intermediary completes the payment, the bank will deal with the buyer according to the domestic law of the country where the buyer is located.

Online Business:

Online, e-commerce and service businesses often use Letters of Credit for overseas contracts. For companies producing software, or other online services that demand the employment of significant resource, it is important to consider external finance to free up working capital.

Jason Gavin

Email: jasongavin44@gmail.com

Telephone/WhatsApp: + 44 7452 390049

Twitter: @JasonGa58390383


Comments

Post a Comment

Popular posts from this blog

BGs | SBLCs | LCs | DLCs | PBs | BANK DRAFT ARE GENUINELY BEING LEASED AND SOLD AT LOW RATES.  GENUINE BANK GUARANTEE (BG) AND STANDBY LETTER OF CREDIT (SBLC)  for lease and sale at the lowest rates available with other financial instruments such as MTN, CD, DLC. I am a direct Mandate to a genuinely renowned Investment Finance Company offering Cash & Asset Backed Financial Instruments on Lease and Sale at the best rates and with the most feasible procedures. Instruments offered can be put in all forms of trade and can be monetized or discounted for direct funding. For Inquiry Kindly Contact: Email: jasongavin44@gmail.com Telephone: + 44 7452 390049 Twitter: @JasonGa58390383
Read more
  Money as a Medium of Exchange: Before the development of a medium of exchange  that is, money—people would barter to obtain the goods and services they needed. Two individuals, each possessing some goods the other wanted, would enter into an agreement to trade. Early forms of bartering, however, do not provide the transferability and divisibility that makes trading efficient. For instance, if someone has cows but needs bananas, they must find someone who not only has bananas but also the desire for meat. What if that individual finds someone who has the need for meat but no bananas and can only offer potatoes? To get meat, that person must find someone who has bananas and wants potatoes, and so on. The lack of transferability of bartering for goods is tiring, confusing, and inefficient. But that is not where the problems end; even if the person finds someone with whom to trade meat for bananas, they may not consider a bunch of bananas to be worth a whole cow. Such a trade requires co
Read more
How Is Money Measured? But exactly how much money is out there, and what forms does it take? Economists and investors ask this question to determine whether there is inflation or deflation. Money is separated into three categories so that it is more discernible for measurement purposes: M1  – This category of money includes all physical denominations of coins and currency; demand deposits, which are checking accounts and NOW accounts; and travelers' checks. This category of money is the narrowest of the three, and is essentially the money used to buy things and make payments (see the "active money" section below). M2  – With broader criteria, this category adds all the money found in M1 to all time-related deposits, savings accounts deposits, and non-institutional money market funds. This category represents money that can be readily transferred into cash. M3  – The broadest class of money, M3 combines all money found in the M2 definition and adds to it all large time dep
Read more