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 the must to be aware of the methods of payment in international trade available in the market.
Terms of Payment in Imports and Exports
Payment Terms plays an important role while drafting the sales contract between the buyer and seller. There is a wide range of payments term that helps traders to do overseas trade deals with no fiscal risk. Mostly, traders rely on financial products such as Letter of Credit – DLC MT700, Standby LC. And Bank Guarantee, Performance Bond, Bank Comfort Letter, and Advance Payment Guarantee.
Statistics revealed that nearly 80% of traders rely on these kinds of trade finance products. As it provides a kind of fiscal guarantee and assurance to conclude their deals. Among all these financial services, the methods of Payment in International Trade often preferred by all parties is – Letter of Credit. This article focuses on DLC MT700.
DLC MT700 – Secure Method of Payment in International Trade
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 have been shipped to 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 Payment Method in International Trade
There are certain DLC terms and conditions that should meet by the beneficiary prior to claiming the documents for payments. Therefore, the importer has to send the LC draft to the exporter. And get their consent prior to the issuance. The exporter should examine all the LC terms stated in the draft. And, if they have any amendments require, they can inform the importer to make the changes, prior to the issuance. It means, both the parties involved in the trade will mutually agree on the LC’s draft, prior to its issuance.
Under LCs, the seller will receive the payments upon submission of all the documents. And that proves they have met all their obligations, as per the terms. The bank reviews all the documents verifies its authenticity and acknowledges before releasing the payments. Compared to all other financial tools, Letters of Credit helps traders to facilitate their imports and exports. Also, it provides instant payments after the fulfillment of certain conditions by the seller.
How to Get LC MT700
Understanding the benefits of LCs, the banks are seeing the growing demand for LCs requests. To avail such LC MT700 from the banks, the buyer needs to deposit a certain margin value; or to provide security as collateral. But under certain cases, buyers who don’t have cash funds in their hand; may not be able to avail Letter of Credit from their bank.
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!
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