International Trade Financing means providing fund for various international business transactions. This is done by making use of
- International factoring (international buyers)
- Purchase order financing (international suppliers).
There is a wide range of option in international trade financing available for the borrowers. Projects for financing international trade vary greatly.
However, these programs offer facilities for availing the fund depending on the requirements. They offer enough flexibility for reducing costs of transactions and for increasing profits.
Financing international trade- advantages:
The advantages of financing international trade are as follows:
- Minimum Paper works involved as it is mostly taken care of, by the creditor.
- No underwriting by importer
- There is an increase in export sales. One can also avail of credit terms, which are flexible.
- The turnaround time is fast and process is easy.
- It is advantageous for those companies, not eligible for availing traditional financial support of foreign receivables.
Apart from these two usual trends of financing international trades we can provide third party
- Accommodation site L/Cs
- Accommodation ULCs
- SBLC
- Bank Guarantees
- L/Cs discounting
- BG Discounting
- SBLC Discounting
Accommodation site L/Cs
An LC at sight is a letter of credit (LC) that is payable immediately – more or less – after the seller meets the requirements of the letter of credit. This type of LC is the quickest form of payment for sellers.
To satisfy the terms of the LC, a seller needs to submit documents to the bank. Those documents typically include the letter of credit and any documents proving that the exporter has met his obligations (a bill of lading proving that the product was shipped, for example).
We can arrange the same depending on case to case basis priorities
Accommodation ULCs
Also known as usance letter of credit is a financial instrument that sets the terms and conditions for the payment of a debt at a specific date in the future. Typically, the terms and conditions found within the letter of credit will cover details such as the mode of payment used to settle the debt, the total amount owed at the time of settlement, and the name of the beneficiary. It is not unusual for the letter of credit to be accompanied by supporting documents, such as an invoice for the total amount due for payment, and even a time draft that can be processed on the agreed-upon date.
While a usance letter of credit may carry a due date of any duration agreeable to the parties concerned, documents of this type usually include a date that is no more than six months from the date that the letter of credit is issued. This makes the letter of credit a useful financial tool for meeting short-term needs, allowing the recipient of the letter to obtain the credit needed to finance a specific project and hopefully generate enough return from that project to settle the total amount due within the time frame allotted. As with most types of debt instruments, usance letters can be settled in advance if the recipient is able to do so, often with no types of penalties involved.
We can arrange the same depending on case to case basis priorities
SBLC
The stand-by letter of credit (SBLC) is a bank guarantee in the form of a documentary credit. SBLCs are used to:
- Guarantee any failure to pay on the part of the purchaser/importer;
- Guarantee any failure to perform the agreement on the part of the supplier/exporter.
The SBLC is only used if what is agreed between the two parties is not performed or is performed incorrectly. Only the documents requested by the terms of the SBLC are taken into consideration.
SBLCs are subject to the Uniform Customs and Practice for documentary credits (UCP). This means that where commercial documents have to be presented, the UCP sets out how they may be verified.
An SBLC may also be confirmed, whereas a guarantee issued by the beneficiary’s bank requires a double commitment, since the issuing bank has to counter-guarantee the guarantor bank.
We can arrange the same depending on case to case basis priorities
Bank Guarantees
A bank guarantee is a promise from a bank or other lending institution that if a particular borrower defaults on a loan, the bank will cover the loss. Note that a bank guarantee is not the same as a letter of credit.
A bank guarantee enables companies to make purchases that they would otherwise not be able to make; these guarantees thus serve to heighten business activity and expand entrepreneurial activity.
We can arrange the same depending on case to case basis priorities
Discounting of L/Cs, BG, and SBLC
Depending on the issuing institute and solvent nature of instruments we can guide and arrange discounting of all banking instruments including designing underlying transaction required.