BANDENIA CHALLENGER FINANCE Advantages of letter of credit
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Bandenia Challenger Finance is an Elite innovative International Trade solution and Investments Financial Firm engaged in providing unique fintech and trade finance solutions to international clients.
About us
Our strong structured support has helped all our clients to smoothly carry out transactions with deligence, efficacy and always on time. Bandenia Challenger Finance LTD successfully provides the required boost to our client’s working capital and substantially grow their cash flow.
Advantages of letter of credit:
It simply works: In some situations, letter of credit works when other payment options not.
It is a balanced payment option: Importers and exporters could reach reasonable payment terms via letter of credit.
For Exporters: Reach out New Customers:
Increasing Export Coverage:
Establishing a new business connection is not easy. It is difficult to find a new buyer who is ready to make an advance payment to an untested exporter. By offering a letter of credit, the exporter can increase the chance of securing the order.
Exporters can increase their export coverage by regional means if they can effectively use letters of credit. For example, letter of credit is the main payment option for majority of the Middle East countries.
For Exporters: Mitigates Default Risk of the Importer:
Eliminates Importing Country’s Political Risks via Confirmation:
By using a letter of credit, the exporter can replace default risk from the importer to the importer’s bank, because the letter of credit is a conditional payment undertaking of the issuing bank.
By adding confirmation, the exporter can eliminate importing country’s political risks, at least in theory. For further information please read our post “Confirmation and Confirmed Letter of Credit “.
For Exporters: Mitigates Default Risk of the Importer:
Eliminates Importing Country’s Political Risks via Confirmation:
By using a letter of credit, the exporter can replace default risk from the importer to the importer’s bank, because the letter of credit is a conditional payment undertaking of the issuing bank.
By adding confirmation, the exporter can eliminate importing country’s political risks, at least in theory. For further information please read our post “Confirmation and Confirmed Letter of Credit “.
For Exporters: Discounting Possibilities: It is possible to discount letters of credit that do not payable at sight. Once the issuing bank or confirming banks determines that the letter of credit documents are complying, the respected bank can discount the credit.
For Importers: Proof of Creditworthiness:
More Favorable Payment Terms:
By issuing a letter of credit from a reputable bank, the importer proves that he is a financially reputable company.
The importer may be able to convince the exporter to work with a deferred payment terms instead of an at sight payment via a letter of credit. As the exporter can discount the credit any time after the complying presentation, deferred payment should not a big issue for him. Most frequently used deferred payment options under the letters of credit are 30 days, 60 days or 90 days after the bill of lading date.
For Importers: Timely Shipments: Importers can determine the shipment period by using a letter of credit. If the exporter cannot shipped the goods on time, he may face a late shipment discrepancy.
UK Address
UAE Trade Desk
Suite 23, Fifth Floor, 63/66 Hatton Garden,London, EC1N 8LE, United Kingdom.
Suite 602, Sixth Floor, Business Village, Block B, Dubai, PO Box 5610, United Arab Emirates.
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