A Letter of Credit allows our client to trade with confidence when an L/C is stipulated. A Letter of Credit issued on behalf of the importer (buyer) can conditionally guarantee payment to the exporter (seller) provided that documentation submitted by the exporter complies with the terms and conditions of the L/C.
LETTER OF CREDIT INSTEAD OF PO FUNDING?
A Letter of Credit can sometimes serve the same purpose as a purchase order financing facility, for example, a client would like to receive cash payment against the PO, so that they can cover expenses, including, procuring raw materials, etc..
Unfortunately, in many instances, a PO funding facility may not meet the criteria, however, a letter of credit may offer the right solution.
HOW IT WORKS?
The client (You) is issued an L/C against the order it receives from its customer. Our client then uses this L/C as collateral to borrow from their bank. Then our client ships, draws on the L/C, and invoices its customer. We then put together a factoring facility that factors those invoices. The actual structure is put together along these general lines, with some modifications to fit the specific requirements of the client.
For more information, please contact us
more information