The offered payment method can greatly affect the price offered by the Seller; generally the more secure the payment the cheaper the price. Sellers are looking for more security in the payment method because of the high percentage of drop outs of Buyers paying by ordinary DLC, because this payment does not guarantee continuity. Nevertheless, if you are wanting to trade with Chinese buyers, they will generally not offer any other payment option. The payment instrument acceptable to the Seller can vary considerably with each seller and also with the particular commodity being traded some Sellers are happy to accept IRDLC revolving for one month shipment value whilst other Sellers, such as Scrap merchants, may require a BG as security deposit held in trust for one or even two months shipment value as surety against the buyer dropping out of the contract. So why do Buyers drop out? In the past a buyer, to secure the best price, would contract a quantity say up to 12 times more than the quantity they actually required; they pay for 1 or 2 shipments and then drop out; after having obtained the benefit of a price offered for the much larger quantity. Also buyers would drop out of a contract because they had since found a seller with a cheaper price, leaving the initial Seller with ships on contract and product stationary at the loading port incurring demurrage costs. For similar reasons, with contracts such as sugar, payment may be mandatory by FFBG with some sugar sellers. Nevertheless our Sellers payment options will always be clearly outlined in our Soft Offers and are almost always non-negotiable.
Our Payment Options
ALL payment instruments must be issued by a Top 50 Prime World Bank; please check our website for latest Top 50 list. CONFIRMED, Irrevocable Letters of Credit give the seller the greatest protection, since sellers can rely on the commitment of two banks to make payment. The Confirming Bank will pay even if the Issuing Bank cannot or will not honour the draft for any reason whatever. In accordance with the additional risk assumed by the banks, however, confirmed, irrevocable Letters of Credit are more expensive than unconfirmed Letters of Credit.
The three (3) main payment options are :
There are other acceptable payment methods and also variations of these payment methods above applicable to certain commodities that our Sellers may accept, however these will be advised in our Soft Offers. Please clearly define your preferred payment when making your application for quotation.
Once we have given you a Soft Offer we require an LOI or ICPO from the Buyer with wording that mirrors the Soft Offer and which must include Buyer's full banking coordinates. To avoid any dispute regarding commission split at a later date we also require the Buyer, Buyer Mandate and all intermediaries to complete and sign an NCND/IMFPA and pass it to Sell Side for completion. The Seller then issues an FCO or Draft Contract to the Buyer for acceptance.
Proof of Funds
Our Sellers always require POF (Proof of Funds) however this will vary as to when and how this is provided. POF can be offered in a variety of ways.
Whilst permission for a Soft Prove which may be offered in the ICPO or LOI is nice, it is generally not acceptable as it is not a guarantee of any commitment to the contract in hand.
Bank Comfort Letter
A BCL should list a description of the goods, the quantity, the total contract value and the monthly revolving amount expressed in US Dollars. A BCL (Bank Comfort Letter) is becoming less acceptable by the day to both the Seller and the Buyer. Very few USA Banks will issue BCLs because of previous instances where many Sellers have successfully sued the Buyer bank for failure of the Buyer to provide the payment. Also BCLs have been fraudulently designed by Buyers and this has made such documents in doubt.
Swift Code TT Service
SWIFT Code (also known as SWIFT-BIC, BIC code, SWIFT ID or SO 9362) is a standard format of Bank Identifier Codes approved by the International Organization for Standardization (ISO). It is the unique identification code of a particular bank. These codes are used when transferring money between banks, particularly for international wire transfers, and also for the exchange of other messages between banks. The most common acceptable method of providing POF is via SWIFT service Bank to Bank such as MT799, MT999. Sadly, most USA banks won't issue POF by this method either, because they can be held as legally responsible.
Russian Oil Refineries
Many Russian Oil Refineries have been caught with high expense of registering Contracts with Russian Ministry of Energy and Buyers then unable to finance the deal so the Russian Refineries have been trying for some time to solve this serious problem. They tried to have the Buyer pay the Registration Costs upfront but this left the door open for scammers to represent themselves as a Seller and fraudulently take the upfront payment. They tried to have the Buyer deposit an amount of money in an Escrow account but that also attracted the scammers. So Buyers need to be carefully when selecting a Facilitator. Our Sellers do not require any up-front payment.