#Letterofcredit

Key Differences Between A Letter Of Credit & Standby LC Letter of credit (LC) & Standby Letter of credit (SBLC) are both the most popular, & reliable trade finance instruments used by global importers & exporters in international trade to reduce the risk of payment failure & to ensure financial stability. A Letter of credit is a primary method of payment, while Standby LC is used when there’s a risk of buyer’s non-performance during a transaction. So, what is the difference between an LC and SBLC? Let’s check out: Letter of Credit Vs Standby Letter of Credit Both the letter of credit (LC), and the Standby letter of credit (SBLC) are payment guarantee instruments used in international trade. In this article, we’ve discussed the key differences and usage between LC and SBLC. Take a look: What is a Letter of Credit? Under a letter of credit service, the issuing bank guarantees an on-time & full-fledged payment to an exporter on behalf of its client ie. importer for the ordered goods or services. But in the event, if the importer defaults in payment or is unable to fulfill the terms & conditions of the LC contract, then, the issuing bank will compensate the beneficiary ie. the exporter. Read more: https://www.axioscreditbank.com/blogs/key-differences-between-a-letter-of-credit-standby-lc #letterofcreditservice #StandbyLC #letterofcredit #Differences #tradefinanceinstruments #StandbyLCagreement

How To Get A Letter Of Credit From A Bank To Import Goods From Overseas Applying for a letter of credit (LC) with a bank for overseas transactions can be a complex process, but with careful planning and attention to detail, it can be a smooth and successful experience. An LC is a payment guarantee letter issued by a bank that guarantees payment to the seller for goods or services delivered to the buyer. Here are the steps to apply for an LC with a bank for overseas transactions. Identify the Need for an LC: The first step is to determine whether an LC is needed for the overseas transaction. An LC provides a guarantee to the seller that they will receive payment, which can help to mitigate the risk of non-payment and secure the transaction. Choose a Bank: The next step is to choose a bank that will offer a letter of credit service. Look for a bank that has experience with international trade and a good reputation in the global trade community. Submit an Application: Submit an application to the bank for an LC. The application will typically require detailed information about the transaction, including the amount, currency, and terms of the LC. Provide Required Documentation: The bank will require documentation to support the LC application, such as the purchase agreement, invoices, and shipping documents. Ensure that all documentation is accurate and complies with the terms of the LC. Read more: https://www.axioscreditbank.com/blogs/how-to-get-a-letter-of-credit-from-a-bank-to-import-goods-from-overseas #letterofcredit #internationaltrade #paymentguaranteeletter #revocableLC #bankguarantees #standbyLC

How do specialised Trade Finance companies differ from Banks? Exporters are increasingly running into cash flow issues as payment cycles lengthen and more importers seek credit terms on payment. If your funds are held up, you won't be able to pay your vendors on time or stock up on materials for future orders. This could stifle expansion and potential, ultimately detrimental to your export business's success. Exporters often use bank loans to bridge this funding gap. However, bank lines are unsuitable for Trade Finance Service due to the following reasons: Collateralized: When you apply for a loan from a bank, they will want you to provide tangible collateral, such as a piece of property or some machinery. You won't be able to have access to bank lines if you don't have any collateral to put up. Limited: There is a direct correlation between the value of your fixed assets and the quantity of financing you may get from a bank. However, companies often have sales that are much beyond their fixed assets and need more capital to export their surplus through traditional banking channels. In addition, you'll need access to your locked-up working capital during peak seasons when you may be experiencing additional demand, but banks will only extend your facility. Read more: https://emeriobanque.medium.com/how-do-specialised-trade-finance-companies-differ-from-banks-69b096d48843 #InternationalTradefinance #financialinstitutions #LetterofCredit #BankGuarantee #TradeFinanceService

3 Common Types of Trade Finance Products Explained There are several definitions of trade finance available online, and the terminology employed is intriguing. It is characterised as a "science" and "an imprecise term covering a variety of different activities." Both are correct, as is the nature of these things. Managing the money required for international trade is a precise science. However, within this science, Trade Finance Service has access to a vast range of tools that affect how cash, credit, investments, and other assets can be used for trade. Common Types of Trade Finance Products: 1. Letter of Credit A letter of credit is a payment pledge provided by a bank on behalf of the importing client. It's a common trade finance document that you should be familiar with. Essentially, it is a commitment by the bank to pay the exporter the money within a specified time frame and under the terms and circumstances agreed upon. It enables sellers and buyers to mitigate some of the inherent hazards of international trade, including currency fluctuations, non-payment, and economic instability. 2. Purchase Order (PO) Finance Purchase Order (PO) financing is intended for SMEs that are experiencing inefficiency in their cash flow. To put it simply, it gives funds to pay suppliers with the validated purchase order in order to ensure seamless cash flow. It enables firms to accept a huge volume of orders while adjusting the lending basis to match their specific requirements. This is especially true for SMEs, who frequently get a significant amount of orders but lack the necessary working capital to process them. That is exactly what it does. Even if the volume of orders reduces, there are no ties, so you can quit using it whenever you want. Read more: https://www.emeriobanque.com/blogs/3-common-types-of-trade-finance-products-explained #Tradefinance #letterofcredit #BankGuarantee #supplychainfinance #SMEs #internationaltrade

Supply Chain Finance to Reach USD 13.4 billion by 2031 at 8.8% CAGR The supply chain finance market was estimated at $6 billion in 2021 and is forecast to reach $13.4 billion by 2031, developing at a CAGR of 8.8% from 2022 to 2031, as per the latest reports released by Allied Market Research. Additionally, the reports contain a comprehensive evaluation of the most favorable strategies, extending market requirements, market size, and estimations, value chain, key investors, leaders & opportunities, competitive scenario, and local landscape. The report will provide vital information to new contestants, shareholders, leaders and investors in presenting important techniques for the future and initiating major steps to reinforce and uplift their position in the market. COVID-19 Scenario The sudden outbreak of the Covid-19 pandemic had adverse effects on the development of the global supply chain finance market, leading to an increase in remote working activities building an overwhelming task of receiving data from multiple locations & sources for the supply chain finance firms. Read more: https://www.emeriobanque.com/news/supply-chain-finance-to-reach-usd-13-4-billion-by-2031-at-8-8-present-cagr #supplychainfinance #CAGR #blockchain #tradefinancedivision #globalmarket #LetterofCredit

How Investment in Trade Finance Can Help SMEs Thrive? A healthy trading system depends on the availability of finance. Up to 80% of current Global Trade Finance is backed by credit insurance or other financing. However, there are sizable gaps in the available resources, making it difficult for many businesses to access the necessary financial tools. With sufficient trade finance, businesses can have the resources they need to trade and grow, taking advantage of opportunities for development and expansion. Small and medium-sized businesses (SMEs) need help finding financing with favourable terms. This is especially concerning because SMEs constitute a significant force in trade, employment, and economic growth. According to research, SMEs encounter these obstacles in developed and developing nations, but the difficulties are most significant in lower-income countries. Trade digitalization has no definition, but it typically entails the digital twining of supply chains, the dematerialization of documents, and the digital data exchange. It means adding an electronic or computerized layer to business processes. A key distinction in the new reality is that digitalization also refers to using digital channels to assist SMEs in creating value. By doing away with paper-based transactions, SMEs can increase productivity and transparency while avoiding delays brought on by physical documents getting misplaced or destroyed along the way. Read more: https://www.emeriobanque.com/blogs/how-investment-in-trade-finance-can-help-smes-thrive #GlobalTradeFinance #tradefinance #supplychains #SMEs #TradeFinanceServices #Letterofcredit #Tradefinanceinstruments

How to Grow And Revive A Struggling Business The mindset you have plays a crucial role in overcoming business failure. It starts with a willingness to adapt and a flexible, upbeat attitude. Whether or not failure inevitably leads to success depends on how we handle it. People tend to strike the most evident immediate issues with vigour and unreservedness. That makes sense and may even be wise from a business perspective. It is also a good idea to take a step back and consider the big picture to determine what is still effective and what may need to change. It is an opportunity to gain a deeper understanding of the size and scope of current issues and your company's business model, including how its weaknesses and strengths are implemented. Working capital financing from an external source is referred to as trade finance. Companies that export or import goods frequently use this type of short-term credit. Trade finance instruments are put to use here. It is typically supported by an insurance policy or secured against goods. Read more: https://www.axioscreditbank.com/blogs/how-to-grow-and-revive-a-struggling-business #StrugglingBusiness #TradeFinance #Letterofcredit #TradeFinanceService #Finance #GlobalTradefinance

What Is The Difference Between Bank Guarantee And Letter Of Credit? Being in international business, you might be very well aware of the concept of bank guarantee and letter of credit but sometimes, it becomes difficult to differentiate between these two as both the terminologies look similar but they are very different from each other. Both the financial instruments are the legal guarantees from the lending institution that the exporter will be paid on-time for delivered goods & services. Plus, both assure that the importer will be able to pay the debt, no matter what the financial circumstances are. But in case, if the buyer is unable to pay, the lending institution will step in and pay the amount. Both instruments provide financial assistance and reduce risk factors and grow global transactions. Difference Between Bank Guarantee And Letter Of Credit So, what is the difference? The key difference is that letters of credit are widely used in international trade & transactions due to the risk factors involved in global trade, for example, distance, different laws, and unfamiliarity of the parties to the contract towards one another, etc. While bank guarantees, on the other hand, are often used in real estate and infrastructure contacts to mitigate the credit risks in the domestic market. Let’s understand the difference between their definitions. 1. What Is A Letter Of Credit? 2. What Is A Bank Guarantee? Emerio Banque is a legal and private financial institution specializing in international trade finance services, import/ export, letter of credit, and other offshore banking services. Read more: https://www.emeriobanque.com/blogs/what-is-the-difference-between-bank-guarantee-and-letter-of-credit #letterofcreditandbankguarantee #internationaltrade #bankguarantee #letterofcredit #tradefinanceservices