#Letters of Credits (LC)

[axioscreditbank]

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

[simproglobal]

When adopting financial assets management software, businesses must assess four key factors: customizability and scalability to meet growing needs, integration capabilities for seamless operations, security and compliance to protect sensitive data, and automation with reporting features for efficiency. Proper evaluation ensures an optimized solution, enabling better financial decision-making and operational efficiency.

[infocrazebyrepwoop]

Bangladesh Importers Open $68.19bn in LCs for FY24

Bangladesh importers opened letters of credit (LCs) totaling $68.19 billion in FY24, marking a 1.85% increase from the previous year, according to Bangladesh Bank (BB) data. In FY23, the amount of LC openings was $66.95 billion. In FY22, it was recorded at $90.43 billion. Central bank data also showed that settlements were recorded at $66.0 billion against the $68.19 billion in LC openings in…

[letters-of-credit]

Secure Your International Trade _ Letters of Credit_ Express Trade Finance _ Dubai

[prominencebank]

Dive deep into the intricacies of Letters of Credit, unraveling their significance in global trade, with expert insights from Prominence Bank.

[aiolegalservices]

AIO Business and Startup Support- Companies Formation & Flag Registration and Securing Fund

AIO Legal Services is currently offering financial support and offshore registration assessments for businesses and startups around the world. AIO Legal Services as  a Qualified Intermediary (QI) at the Marshall Islands Registry, has the ability   to provide your business with a range of services, including: • Company formation; • Flag registration; • Due diligence preparation and…

[emeriobanque]

What is a Transferable Letter of Credit?

A Transferable Letter of Credit is a letter of credit facility where the first beneficiary can transfer some or all of the credit to another party, known as the second beneficiary. This type of letter of credit gives the seller/exporter the authority to instruct the bank to pay or make the credit available completely or partly to one or more secondary beneficiaries.

Transferable Letter of Credit Definition

Let’s understand the meaning of Transferable LC in simple words. A transferable letter of credit is a trade finance instrument that allows the first or original beneficiary to transfer some or all the right of payment to another party, which creates a second beneficiary.

The party that initially accepts the transferable letter of credit issued by the importer’s bank is referred to as the first, or primary beneficiary. A transferable LC is often used in international trade transactions to ensure timely payment to the supplier or manufacturer.

Key Takeaways:

1. The ultimate agenda of a transferable Letter of credit is to enable the original or initial beneficiary to transfer the right of payment to another beneficiary which they owe. 2. The first beneficiary is authorized to transfer part or all of the right of payment to a second beneficiary. 3. Since applying for a letter of credit is a much more detailed process and can lead to payment delays and additional fees, issuance of a transferable LC ensures sound cash flow for third-party manufacturers. 4. The parties involved in a transferable letter of credit, in addition to the bank, include the applicant (the buyer of goods/service), the first beneficiary (A retailer or broker), and the second beneficiary (A supplier or manufacturer).

How Does a Transferable Letter of Credit Work?

As we know that a letter of credit is a legal document issued by a bank, guaranteeing that a seller will receive the payment from a buyer on time for delivered goods or services. If the buyer fails to do so, the issuing bank will compensate the seller.

When you apply for a transferable LOC, it should be strictly mentioned as such by the issuing bank. By obtaining a transferable letter of credit, the first beneficiary is capable of transferring an LC to another, who then is known as the second beneficiary.

Once named as a second beneficiary, it possesses all the same rights as the original does. The original beneficiary then can request the bank to transfer a part or all the credit to the second beneficiary.

This second beneficiary might, for example, be a supplier or manufacturer that the seller is relying on to send the ordered goods to the buyer. In this type of arrangement, the first beneficiary is acting as a sort of middleman between the buyer and the third-party supplier. Thereby, there can be more than one secondary beneficiary.

In an LC agreement, a seller (first beneficiary) has a sale to execute with the buyer but is unable to complete the merchandise order from the manufacturer. By transferring a portion of transferable letters of credit to the manufacturer, ie. third-party supplier, the seller provides them an assurance of payment by leveraging the buyer’s banker’s credit and utilizes this LC to purchase those goods on time.

How to Apply for a Transferable Letter of Credit?

The process of applying for a transferable LOC is almost the same as applying for a loan. Here are a few steps to follow:

Step 1 — Buyer Requests

The buyer/importer must submit an application to its bank with a request to issue a transferable letter of credit in favor of the exporter/seller.

Step 2 — Evaluation By Buyer’s Bank

The bank will then analyze & evaluate the buyer’s credit score and financial stability in the underwriting process. Underwriting is simply a procedure banks conduct to assess how much risk a borrower poses and determine whether to grant them credit or not.

Step 3 — Review By Exporter’s Bank

After the approval, the bank will draft the transferable LC based on the terms & conditions mentioned in the sales agreement. Then it forwards the LC to the exporter’s bank which then further checks for any discrepancies and sends it to the exporter.

Step 4 — Shipment of Goods

After getting the LC, the exporter will then ship the goods to the buyer and submit the necessary documents to its bank.

Step 5 — Exporter’s Bank Forwards The Documents

The exporter’s bank reviews the submitted documents by its client, ie. the exporter to make sure they comply with the terms & conditions of the LC contract. If any errors or discrepancies occur, they get fixed. Once the documents are approved, the exporter’s bank will forward them to the buyer’s bank.

Step 6 — Release of Payment

The buyer’s bank checks the documents thoroughly and checks the delivery of goods with the buyer. If everything seems right, the bank releases payment to the exporter’s bank and later collects the same from the buyer.

Transferable Letter of Credit Vs Confirmed Letter of Credit

A transferable LC is a much more convenient & favorable option for the buyer than a confirmed LC. It’s because the buyer is only required to interact with one bank for a transferable LOC.

While in the case of a Confirmed letter of credit, the buyer must obtain two letters of credit to provide an additional payment guarantee to the seller, with the second one guaranteeing the first one. This type of trade finance instrument is issued in cases where the seller isn’t assured of getting payment from the first bank (buyer’s bank). In such a case, a second bank that the seller is familiar with issues an LC to support the first one.

Transferable Letter of Credit Vs Back-to-Back Letter of Credit

A Back-to-Back Letter of Credit involves the issuance of two letters of credit to finance a single transaction when a middleman is involved between the buyer and seller, such as a retailer or broker. It enables the first beneficiary to transfer the original LC as a payment security in favor of the second beneficiary, ie. the supplier.

But a Back-to-Back LC is a bit different from a transferable letter of credit. Here, Instead of issuing an LC to the supplier, the first beneficiary requests the buyer to issue a transferable LC in favor of the second beneficiary.

Transferable Letter of Credit Vs Non-Transferable Letter of Credit

An LC can be transferable or non-transferable. If a bank issues a transferable LC, the word “Transferable” is mentioned on it. In the absence of such a word, an LC is deemed to be a non-transferable LC.

A transferable LC is often used in international trade transactions to provide timely payment assurance to the supplier or manufacturer. Letters of credit are an important trade finance tool in business transactions between buyers and sellers, especially if the parties reside in different nations or there is a lack of trust. Transferable letters assure both the sellers and their suppliers that they will be paid for their goods & services.

Originally published at https://www.emeriobanque.com.

[financesevaloan]

Working Capital Loan

A working capital loan is a loan used to conduct day-to-day operations of a business and this is also known as working capital.

Without a free flow of how to manage working capital loans, an organization may find itself unable to function efficiently. Thus, to ensure seamless operational performance of the business, you can opt for a Working Capital Loan.

What is a Working Capital Loan?

This type of loan is availed to fund the day-to-day operations of a business, ranging from payment of employees’ wages to covering accounts payable.  

Not all businesses see regular sales or revenue throughout the year, and sometimes the need for capital to keep the operations going may arise.  

This happens when the companies have any seasonal business cycles or cyclical sales, while some other may require such a loan during festive seasons or periods of reduced business activity.

A working capital loan can be obtained in the form of secured backend by collateral and unsecured in which you are not requirement of working capital loan to pledge collateral to avail of the loan, depending on the loan amount and the business financial health.  

A company’s working capital is also a reflection of its financial health and liquidity position.

Types of Working Capital Loan

Overdraft Facility or Cash Credit

Term Loan

Bank Guarantee

Packing Credit  

Letter of Credit

Accounts Receivable Loan

Post Shipment Finance

[spacetimewithstuartgary]

Cosmic rays' vast energy traced to magnetic turbulence

Ultra-high energy cosmic rays, which emerge in extreme astrophysical environments—like the roiling environments near black holes and neutron stars—have far more energy than the energetic particles that emerge from our sun. In fact, the particles that make up these streams of energy have around 10 million times the energy of particles accelerated in the most extreme particle environment on earth, the human-made Large Hadron Collider.

Where does all that energy come from? For many years, scientists believed it came from shocks that occur in extreme astrophysical environments—when, for example, a star explodes before forming a black hole, causing a huge explosion that kicks up particles.

That theory was plausible, but, according to new research published in The Astrophysical Journal Letters, the observations are better explained by a different mechanism. The source of the cosmic rays' energy, the researchers found, is more likely magnetic turbulence. The paper's authors found that magnetic fields in these environments tangle and turn, rapidly accelerating particles and sharply increasing their energy up to an abrupt cutoff.

"These findings help solve enduring questions that are of great interest to both astrophysicists and particle physicists about how these cosmic rays get their energy," said Luca Comisso, associate research scientist in the Columbia Astrophysics Lab, and one of the paper's authors.

The paper complements research published by Comisso and collaborators on the sun's energetic particles, which they also found emerge from magnetic fields in the sun's corona. In that paper, Comisso and his colleagues discovered ways to better predict where those energetic particles would emerge.

Ultra-high energy cosmic rays are orders of magnitude more powerful than the sun's energetic particles: They can reach up to 1020 electron volts, whereas particles from the sun can reach up to 1010 electron volts, a 10-order-of-magnitude difference. (To give an idea of this vast difference in scale, consider the difference in weight between a grain of rice with a mass of about 0.05 grams and a 500-ton Airbus A380, the world's largest passenger aircraft.)

"It's interesting that these two extremely different environments share something in common: their magnetic fields are highly tangled and this tangled nature is crucial for energizing particles," Comisso said.

"Remarkably, the data on ultra-high energy cosmic rays clearly prefers the predictions of magnetic turbulence over those of shock acceleration. This is a real breakthrough for the field," said Glennys R. Farrar, an author on the paper and professor of physics at New York University.

IMAGE: Volume rendering of (a) ∣∇ × B∣ and (b) ∣∇ × ΓV∣ (normalized to their respective rms values) taken at t = 2.5lc/c from the reference turbulence simulation (σ = 16, lc/di = 133). (c) One-dimensional spectra of the turbulent magnetic field (red) and fluid four-velocity (blue) at t = 2.5lc/c. Each spectrum is normalized so that ∑k⊥P(k⊥)=1. A power-law slope of k⊥−5/3 (dashed black line) is shown for reference. Credit: The Astrophysical Journal Letters (2024). DOI: 10.3847/2041-8213/ad955f

[exportersworldb2b]

 Introduction

The USA is one of the largest import markets in the world, making it a lucrative destination for Indian exporters. With a diverse range of industries and a high demand for quality products at competitive prices, exporting to the USA can be a game-changer for businesses in India. However, navigating the complex regulatory landscape, ensuring compliance, and optimizing costs are crucial to profitability.

In this guide, we will take you through a step-by-step process on how to export to the USA profitably. Whether you are a small business or an established exporter in India, this guide will help you maximize your opportunities while minimizing risks.

Understanding the Export Market in the USA

Who is the Biggest Exporter to the USA?

The USA imports goods from various countries, but the biggest exporters to the USA include:

China – Electronics, machinery, textiles

Mexico – Vehicles, machinery, agricultural products

Canada – Oil, minerals, vehicles

India – Pharmaceuticals, textiles, gems, IT services

India is a significant trade partner, with exports to the USA growing steadily due to strong demand in various sectors. Understanding market demand and key competitors will help you position your products effectively.

Steps to Export to the USA from India

1. Identify Profitable Products to Export

Certain products have a high demand in the USA, including:

Pharmaceuticals

Textiles & Apparel

Gems & Jewelry

Engineering Goods

Spices & Agro Products

Handicrafts & Home Decor

Conduct market research to determine demand trends, competition, and pricing strategies before finalizing your export product.

2. Register Your Export Business

To legally export from India, follow these steps:

Register your company with the Ministry of Corporate Affairs (MCA).

Obtain an Importer Exporter Code (IEC) from the Directorate General of Foreign Trade (DGFT).

Register with the GST Department for tax compliance.

Obtain necessary certifications depending on your product, such as FDA approval for pharmaceuticals.

3. Comply with USA Import Regulations

The USA has stringent import regulations. Ensure compliance with:

Food and Drug Administration (FDA) for food, drugs, and cosmetics.

US Customs and Border Protection (CBP) for tariff classifications and duties.

Consumer Product Safety Commission (CPSC) for safety standards.

Environmental Protection Agency (EPA) for eco-friendly products.

Hiring a compliance expert or consultant can help navigate regulatory complexities and avoid penalties.

4. Find Reliable Buyers and Distributors

Connecting with the right buyers and distributors is key to success. Consider:

B2B platforms like Exporters Worlds, IndiaMART, and Global Sources.

Trade fairs and exhibitions such as MAGIC Las Vegas (apparel) or JCK Las Vegas (jewelry).

Chambers of commerce and export promotion councils for networking.

Building strong relationships and offering competitive pricing will help secure long-term business deals.

5. Choose the Right Shipping and Logistics Partner

Efficient logistics ensure timely delivery and cost-effectiveness. Key factors to consider:

Select between air freight (fast but expensive) or sea freight (cost-effective for bulk orders).

Work with reliable freight forwarders like DHL, FedEx, or Maersk.

Ensure proper packaging and labeling to meet US standards.

Get insurance coverage to mitigate transit risks.

6. Manage Costs and Optimize Pricing

To maintain profitability, focus on:

Reducing costs through bulk shipping and negotiating with suppliers.

Taking advantage of export incentives like MEIS (Merchandise Exports from India Scheme).

Setting competitive yet profitable pricing based on market demand and competitor analysis.

7. Handle Payments Securely

International transactions should be secure and hassle-free. Consider:

Letter of Credit (LC) for guaranteed payments.

PayPal, Stripe, or international bank transfers for online transactions.

Partnering with financial institutions that offer export credit insurance.

Common Challenges and How to Overcome Them

Challenge 1: Stringent Compliance Regulations

Solution: Work with legal experts and compliance consultants who specialize in US import laws.

Challenge 2: High Shipping and Tariff Costs

Solution: Optimize logistics, use Free Trade Agreements (FTAs), and explore bonded warehouses in the USA.

Challenge 3: Finding Trustworthy Buyers

Solution: Leverage trade fairs, B2B portals, and government trade facilitation programs.

Conclusion

Exporting to the USA from India can be a highly profitable venture if done strategically. By choosing the right products, ensuring compliance, optimizing logistics, and building strong buyer relationships, Indian exporters can establish a successful and sustainable export business.

If you found this guide helpful, subscribe to our newsletter for more export insights, or leave a comment below with your questions!

[axioscreditbank]

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

[postshipmentfinancing]

The Role of Shipment Finance in Reducing Supply Chain Disruptions

Introduction

In the fast-moving world of global trade, supply chain disruptions can have significant financial and operational consequences for businesses. Delays in shipments, payment uncertainties, and fluctuating demand can create cash flow challenges and hinder international trade. Shipment finance plays a crucial role in mitigating these disruptions by providing businesses with the necessary liquidity to ensure seamless supply chain operations.

By leveraging financial solutions such as letters of credit, invoice factoring, and trade credit insurance, businesses can overcome obstacles related to delayed payments, logistical setbacks, and supplier uncertainties.

Understanding Shipment Finance and Its Role in the Supply Chain

Shipment finance refers to various financial tools and credit facilities designed to help exporters, importers, and logistics providers manage cash flow, mitigate risks, and enhance supply chain efficiency. These solutions ensure that businesses can continue operations without financial strain, even when delays or unforeseen challenges arise.

Supply chain disruptions can occur due to various reasons, including:

Payment delays from buyers, impacting working capital.

Transportation and logistics issues, such as port congestion or shipment delays.

Fluctuating demand, requiring businesses to secure funds for inventory adjustments.

Geopolitical or economic risks, affecting trade routes and financial stability.

By using shipment finance, businesses can maintain stability and avoid costly interruptions.

How Shipment Finance Helps Reduce Supply Chain Disruptions

1. Ensuring Steady Cash Flow for Suppliers and Exporters

Many exporters operate on credit terms ranging from 30 to 90 days, meaning they do not receive payment immediately after shipping goods. This delay can strain working capital and hinder their ability to fulfill new orders. Shipment finance solutions like invoice factoring and supply chain financing allow exporters to receive immediate funds by selling unpaid invoices to financial institutions.

2. Minimizing Risks of Payment Defaults

One of the biggest concerns in international trade is the risk of non-payment or late payments by buyers. Financial tools like letters of credit (LCs) and trade credit insurance provide security to exporters, ensuring that they receive payment even if the buyer defaults. This helps reduce financial uncertainty and strengthens supplier-buyer relationships.

3. Reducing Transportation and Logistics Delays

Shipment delays can disrupt the entire supply chain, leading to increased costs and lost revenue. Companies that utilize shipment finance can access pre-shipment financing, allowing them to pay for raw materials, manufacturing, and logistics in advance, ensuring that shipments are not delayed due to lack of funds.

4. Improving Supplier Payment Terms

Many businesses depend on suppliers for raw materials and goods. Without timely payments, suppliers may delay production, leading to bottlenecks in the supply chain. Shipment finance enables businesses to secure early payment solutions for suppliers, ensuring uninterrupted production and delivery.

5. Managing Exchange Rate Fluctuations

Currency volatility is a major risk in international trade. Exporters and importers dealing with multiple currencies can use shipment finance solutions to hedge against foreign exchange risks, ensuring predictable cash flow and stable pricing.

Real-World Applications of Shipment Finance in Supply Chain Management

Manufacturers Securing Raw Materials – A manufacturing company using shipment finance can pay suppliers upfront for raw materials, avoiding production delays caused by supply shortages.

Exporters Expanding Internationally – Exporters can use trade credit insurance to enter new markets with reduced financial risk.

Retailers Managing Seasonal Demand - Retailers importing goods ahead of peak seasons can use shipment finance to maintain inventory levels without depleting working capital.

Conclusion

Shipment finance is a vital tool for reducing supply chain disruptions, ensuring that businesses can operate efficiently despite logistical, financial, or geopolitical challenges. By providing liquidity, mitigating payment risks, and facilitating smooth transactions, shipment finance helps companies maintain operational resilience and long-term growth in global trade.

[essfeed]

Under what circumstances would you provide a letter of credit that is payable at a later date?

A Comprehensive Overview of Deferred Payment Letters of Credit A deferred payment credit, commonly referred to as a deferred payment letter of credit (LC), is a financial instrument that specifies a set period for payment under the LC. This period, or tenor, is typically defined as a specific number of days from a predetermined date, such as either the shipment or invoice date. Payments made…

[munaeem]

Methods of Payment in International Trade

When engaging in international trade, businesses utilize several methods of payment to facilitate transactions. Here are some common methods: Letters of Credit (LC): A guarantee from a bank on behalf of the buyer that payment will be made to the seller, provided that the seller meets the terms specified in the letter. Bank Transfer: Direct transfers between bank accounts, often utilizing…