Letter of Credit Application to Open LC MT700 for Your Import Deal
Letters of Credit have been used by traders to secure their trade deals. This Bank Instrument acts as a guarantee to assure the supplier that the payment will be made, once the goods are shipped as per the agreed terms. Due to the nature of international trade including – distance, different laws in each country, and trust issues, the role of a Letters of Credit in international trade is inevitable. If you are going to use LCs for your import deals, you must be aware of the Letter of Credit Application Process.
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Letter of Credit Application for Opening LC MT700
If you have entered into a contract with the overseas supplier to import goods under DLC Payment terms, you need to open a Documentary Letters of Credit on behalf of your company and in favor of your supplier. For this, you need to approach your bank with the DLC request.
Opening LCs from banks with whom, you are already having a relationship is a simple process. To issue the MT700, banks require an LC Request Form accompanied with a Pro-forma invoice or SPA. And then, the bank will demand you to provide a cash margin to proceed with their MT700 request. They will also do a complete background check on your credit history, transaction history, & company status, etc. If you meet with all these parameters, they will consider your DLC request and start processing it. In case, if you are a new account holder in your bank and they don’t know your credit status, you cannot expect the bank will open the LC MT700 without a 100% cash margin.
For instance, if you require the LC with a value of USD 200,000. Then the bank will block USD 200,000 being a cash margin from your account. Additionally, the bank will charge LCs’ commission, processing fee, and swift charges. For you, as a trader, it’s nearly impossible to tie up all your capital in a single deal as a cash margin. In this scenario, you can get help from an LC Provider in Dubai.
Role of LC Providers in Issuing MT700
Bronze Wing Trading L.L.C., the trusted LC Providers in Dubai understands the cash flow issues faced by traders. So, to help traders with their Letters of Credit needs, we are extending our trade finance facilities available in European Banks on behalf of buyers to get the required LC without cash margin!
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How to Open LC MT700
If you contact us with your Letters of Credit request, our trade finance experts will analyze your trade deal. Then, if it falls under our parameters, we will approve your LC request. And, you need to sign the service agreement with us for your LC application; also, pay the service charges to start the work on your LC request. After that, we will start structuring your DLC with our bank and will send the LC draft for your approval. Now, you need to verify the LC draft based on the Letter of Credit Checklist and provide your approval on the LC draft. Once you have given your approval and paid the LC charges, we will instruct our bank to issue the required LC at Sight to your supplier’s account via SWIFT MT700.
In this way, you can avail the required DLC MT700 and conclude your trade deal within 48 hours!
To submit your Letter of Credit requirements, contact us now!
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