Definition and advantages of Export Letter of Credit

 A letter of credit is a very important tool for facilitating global trade. It advantages both the exporters and importers. An import letter of credit improves the credit value of the importer while an export letter of credit alleviates the credit risk for the exporter and helps perk up his cash flow. Here, we will be talking about Export Letter of Credit. So, let’s gather some important knowledge regarding it.

What is EXPORT LETTER OF CREDIT?

An importer issues an import letter of credit with the exporter being the recipient. The same letter of credit, when received by the exporter’s bank or non-bank financial company becomes an export letter of credit. So, both the export and import letters of credit are greatly the same, it’s just the viewpoint which is different.

The exporter requires fulfilling the terms and conditions and giving in the necessary documents as stated in the letter of credit before he can be given payment.

What are the BENEFITS OF EXPORT LETTER OF CREDIT?

One of the most excellent methods after the advance mode of payment for any business the transaction is Letter of Credit (LC) mode, as purchaser’s bank or non-bank financial company guarantees payment to the supplier through seller’s bank on presentation of necessary documents as per LC.

The major benefit of Letter of credit to a supplier is, it decreases the credit risk as the issuing bank or non-bank financial company is legally responsible to pay even if the importer fails to pays. Export letter of credit can be modified to the requirements of the exporter, therefore it offers flexibility in terms and conditions so long as they are fair and lawfully binding.

In an export and import business, the geographical distance between importer and exporter is very distant; therefore determining credit worthiness of purchaser is a major risk. In a mode of Letter of credit, such risk can be evaded.

Purchaser cannot refuse payment by raising dispute on the quality of supplies, as letter of credit terms and conditions are rooted in certification. This is a major benefit of the Letter of Credit in terms of supplier’s standpoint. Some of the fake purchasers intentionally holds-up or delays payments by complaining about the quality of supplies.

Which non-bank financial company can help you in getting export letter credit?

“Merchant Credit and Guarantee Corporation Limited (MCGCL)” is a reputed non-bank financial company that can provide you with Export letter of credit. They are working as a non-bank financial company in this industry for years. Know about this company more by visiting their website- merchantcreditcorp.co. Also, read other online articles for gaining more knowledge on this context.

Here’re the most important benefits of Financial Guarantees

 Nowadays a lot of people are considering taking financial guarantees in order to secure their future financially. What is a financial guarantee? It is a surety provided by a financial organisation or a financial institution that they will pay the debts incurred by an individual or an organisation in case they are unable to do so.

When starting a new business you may feel you don’t have enough wages to buy some essential items, in this condition you can take advantage of Financial Guarantees. This helps a business to grow or expand by differing payment of services and goods they are utilising now to a later date. This is going to help you with investing a lot of money in your business and considerably grow.

The next few passages will be concentrating on the advantages of taking financial guarantees.

What are the most advantageous factors of getting financial guarantees?

In the below passages you will know about the advantageous facts of obtaining financial guarantees.

The necessity of financial guarantees is arising gradually because of the augmented defaults by the buyers. Suppliers these days are reluctant to provide merchandise to unfamiliar purchasers without having full payment received.

Previously when financial guarantees were not that familiar or have not been introduced, a sense of distrust was there that if at all those company owners will give the money back. And, there were fair reasons for that, as there are several business owners who never gave them their money back and they had to go through the loss.

Financial guarantees resolved this issue by performing as an assurer to the supplier. After obtaining financial guarantees the retailers will be eager to supply your goods.

By having Financial Guarantees, a production can grab opportunities in the market which were not accessible to it previously. The insight will be developed that a non-bank financial company is standing with you for help. If anything wrong happens, they will take the responsibility and save you from hazard.

Having a financial as your partner is always a sign of the inherent strength and faith towards the business. You will also get peace of mind that there is someone to help you when you will need.

But getting a financial guarantee is not that easy. You will need skilled helping hands for that. A non-financial company can help you in this regard. Banks can also help you but getting a financial guarantee from a bank has never been easy and it may take time. So, a wise decision will be to choose a non-bank financial company and get yourself enough time to concentrate on your business.

In the last passage of this discussion, you will get to know about a well-reputed non-bank financial company.

Consider choosing this well-reputed non-bank financial company

 “Merchant Credit and Guarantee Corporation Limited (MCGCL)” is a well-reputed non-bank financial company that can offer you Financial Guarantees. Get to know about this company more by visiting their website- merchantcreditcorp.co. Also, read other online articles on this context. 

The advantages of having a letter of credit you need to know!

 Letter of credit is customisable and a very effective form which has the capability of enabling new trade relationships by reducing credit risk. But, it has the capability of adding on to the cost of doing some uncertain business in the form of formalities or bank fees. It is essentially a letter issued by one Bank to another concern as a guarantee of payment for a specific person on particular terms and conditions.

People often say Letter Of Credit works very well when other options don’t. Importers and exporters can reach reasonable payment terms via a letter of credit. There are several other benefits involved with having a letter of credit. The most important ones are written in the passages below.

Here’s why having a letter of credit is considered important

These benefits written below are common to get when attaining a letter of credit.

Helps you in reaching new customers

These days, setting up new business connections is not easy. It is very difficult to find a new buyer who will be ready to make an advance payment to an inexpert professional. By offering a letter of credit, you will get a chance of securing the order.

You can enhance Export coverage with its help

Exporters can effectively use letters of credit. For example, the Letter Of Credit is the main payment option for the majority of people in the business. That’s why getting it can advantage you.

Give proof of creditworthiness to all  

By issuing a letter of credit by a well-reputed non-bank financial company, the importer can prove that they are a financially reputable company.

Letter of credit is said to be the most preferable payment terms

The importer may convince the exporter to work with deferred payment terms in place of an at sight payment by means of a letter of credit. As the exporter can discount the credit any time, deferred payment should not at least be a big problem for them.

Willing enough to know about a well-reputed non-bank financial company that can provide you with a letter of credit? Then read the last passage of this article.

Choose this non-bank financial company

 “Merchant Credit and Guarantee Corporation Limited (MCGCL)” is a well-reputed non-bank financial company that can offer you Letter Of Credit. This is a renowned company offering services in Thailand. Get to know about this company more by visiting their website- merchantcreditcorp.co.

The effective services one can attain from non-bank financial companies

The NBFC sector is now growing as an alternative to banks in almost all over the world. Those days are Gone when people used to stand in line for hours in order to get loans from banks. The arrival of Non-Banking Finance Companies has made it easier for the common people to avail loan facilities.

The trouble-free accessibility and remote coverage make non-bank financial companies the most chosen option for borrowers these days in comparison to banks. There are several advantages to choosing NBFC over banks. Here in this article, you will know how a non-bank financial company can advantage you by offering a number of services.

Like banks, they can also offer you letters of credit:

As you know, a letter of credit is a document that guarantees the purchaser’s payment to the suppliers. Now, this can be issued by a non-bank financial company too and like banks they will also guarantee the timely and full payment to the supplier.

If the purchaser is not capable of making such a payment, the non-bank financial company will cover the full or the remaining amount on behalf of the purchaser. This mainly provides security when the seller and buyer are in different countries.

Will help you by offering Bank Guarantees

By offering a bank guarantee a NBFC can promise to cover a loss if a borrower defaults on a loan. This guarantee will allow a company to buy what it otherwise could not, assisting business growth and endorsing entrepreneurial activity. And this guarantee can be availed easily when you will consider choosing non-bank financial companies over banks.

Also attain a performance guarantee from them easily

A performance guarantee by a non-bank financial company is a promise that either a service will live up to certain expectations, or that a product will carry on performing well over a fixed time period.

In the world of business, there are several such guarantees, everyone have created in individual ways to describe the company's vow and extent of future responsibility. Sometimes, non-bank financial companies guarantee the performance of something too, mainly when appointing subcontractors.

Get advantaged by Documentary collection services

A documentary collection is a procedure with which a non-bank financial company chosen by an exporter, collects funds from the importer's bank in return of documents detailing shipped merchandise.

A documentary collection is a trade transaction in which exporters permit their NBFC to act as a collection mediator for payment of sent goods to the purchaser.

They can also help you by offering proof of funds documents

Proof of funds (POF) refers to a document or documents that show a person or entity has the aptitude and funds obtainable for a particular transaction. A non-bank financial company can offer you this.

The purpose of the proof of funds document is to make sure that the funds required to perform the transaction completely are available and lawful.

Get in touch with a well-reputed non-bank financial company

“Merchant Credit and Guarantee Corporation Limited (MCGCL)” is a well-reputed non-bank financial company. Get to know about this company more by visiting their website- merchantcreditcorp.co.