While dealing with imports & exports, the most vital thing that the traders often worried about – Payment Terms. Unlike local trade deals, doing trade with traders who are sitting miles away may create worries about the terms of payments. This is, the buyer may not want to release the payments prior to the shipment, since, they don’t know whether the seller is having enough goods to ship or not. And also, on the other hand, the seller doesn’t want to ship the goods first hand. Because they may not know the credit worthiness of the buyer. So, for all buyers and sellers, it is a must to be aware of the methods of payment in international trade available in the market.
Methods of Payment in International Trade
Choosing the right payment term plays an important role while drafting the sales contract between the buyer and seller. There are a wide range of payment term available for importers who wish to do overseas trade transaction without fiscal risks. Mostly, traders who do import and export mainly rely on financial products such as – Letter of Credit – DLC MT700, Standby LC, Bank Guarantee; also, Performance Bond, Comfort Letter & Advance Payment Bond.
As all these financial instruments provide the required guarantee & assurance in terms of payment & performance, these instruments are considered to be the popular payment terms. As per the recent statistics, nearly 80% of traders depend on these kinds of financial tools to conclude their commodity trade deals and contracts.
Among all these financial tools available, the most common and popular payment term used in international trade is – Letter of Credit. By giving assurance to both buyer & seller, DLC MT700 is used by importers to give assurance to the supplier that the payment will be made once the goods are shipped. With this assurance, it helps importers to import goods from overseas without paying upfront to their supplier.
What is DLC MT700?
Also called as LC MT700, Letter of Credit – DLC MT700 is the most secure financial tool available for global traders. DLC MT700 is the written commitment issued by a bank on behalf of buyers and in favor of sellers. It acts as a guarantee; also, it ensures that the payment will be given to the seller; once the seller met the terms and conditions as stated in the issued MT700.
Also, an LC protects the buyer, since no obligation arises; unless and until the goods reached the buyer’s port, as per the signed contract. LC can be arranged by the buyer based on the sales contract of their trade deals. It can issue for one-time transactions between the seller and buyer or used for an ongoing series of trade deals.
DLC – The Best Methods of Payment in International Trade
If the importer is using DLC as a payment term for the upcoming trade deal; then the parties should meet certain terms and conditions. Once the goods reached the destination port; the seller needs to submit the documents to the bank to get their payment. So, the seller must be aware of the LC terms, as per the issued LC. So, prior to the LC issuance; the buyer has to send the LC draft to the supplier to get their consent. The seller should examine all the LC terms stated in the draft. Further, if they have required any amendments, they can inform the importer to make the required changes in the LC draft, prior to its issuance. By doing so, both the parties involved in the trade will mutually agree on the LC terms.
Since the supplier well aware of the LC terms, they will submit the documents to the bank, after the delivery of goods. The bank will review, verifies and approves all the documents & initiate the payment process. So, the supplier can get instant payment; once the goods reached the destination port.
Compared to all other financial tools, a Letter of Credit is the one and only methods of payment in international trade; that helps traders to facilitate their commodity trade without facing any risks.
How to Get LC MT700
Since LCs provide the real benefits for importers, the banks are seeing the growing demand for LCs requests from buyers. To avail such LC MT700 from the banks for commodity trade, the buyer needs to deposit a certain margin value; or to provide security as collateral. But in certain cases, buyers who don’t have cash funds in their hands; may not be able to avail Letter of Credit from their bank to conclude their commodity deals.
If you’re the one who requires MT700 but facing a lack of cash funds to meet the bank’s demands; contact us today! Bronze Wing Trading L.L.C., the Letter of Credit Providers in Dubai assists traders to avail LC MT700 from rated banks without availing cash margin.
Contact us today to avail DLC MT700 within 2 working days!
Looking to Avail DLC MT700 without Pledging Cash Margin?