Many countries are preparing themselves to lift restrictions to protect their economies from the aftermath of COVID-19. And this increases the demand for PPE supplies, especially gloves, masks, and thermal checking and screening devices. Further, to meet this emerging demand and to earn handsome profits, an Indian trader decided to import Thermal Camera Kits using Usance LC as a payment term.
The Client Required Usance LC
The client is an authorized CCTV Distributor in India. To grow their business and increase their ROI, they decided to purchase IR Camera Kits and then supply them to the local markets – shopping malls, bus terminals, metro stations, schools, etc. This business idea seemed to be a good one for them; but, on the other hand, they were hesitant to deal with unknown suppliers. So, they decided to choose one of the known suppliers from Dubai, UAE.
The Supplier Agreed to Usance LC Payment
They negotiated with the seller and convinced them to supply these camera kits on the basis of the Usance LC Payment term. As the buyer runs an authorized CCTV distribution business in India, the seller agreed to supply the kits based on the stated payment term. And then, the buyer sent their requirements to the seller and asked for the BOQ. Since the quoted price seemed reasonable, the buyer agreed to it and signed the contract with the seller.
The Client’s Challenge to Avail Usance LC
Since the client had already used their banking facility, they were unable to receive the MT700 from their bank. So, they started looking for trade finance providers outside the bank. After understanding the buyer’s requirement, the seller referred Bronze Wing Trading, a Letter of credit provider in Dubai, to the buyer. Further, with the seller’s reference, the buyer contacted us with their request.
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Our Approach in Helping the Client to Avail Usance LC
Once we received the request from the buyer, our team studied their deal and approved their request to issue LC MT700 on their behalf. Then, we asked the buyer to sign the service agreement and pay the service charges to start work on their trade deal. Accordingly, they signed the agreement and transferred the charges to our bank account. Then, we structured their deal and sent the LC draft for their approval. Further, the client reviewed and approved the draft and paid the LC issuance fee. Once the process was completed, we requested our bank to issue the Deferred LC on behalf of the buyer and in favour of the seller.
The Seller Received the LC and Proceeded with the Shipment
As per our request, our bank issued the LC to the seller’s bank via SWIFT MT700. Once the seller received the MT700 in their favour, they were assured that they would receive the payment after the shipment of goods. So, they shipped the required High-Tech IR Camera Kits to the buyer’s port.
Since the seller supplied the goods within the set time limit, the bank released the payment to the supplier at the maturity date. On the other hand, the buyer received the goods at their port and started supplying them to their local markets, earning a good amount of profit.
This is how Bronze Wing Trading L.L.C. helped the buyer purchase Thermal Camera Kits from Dubai using Usance LC.
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Are you going to deal with unknown suppliers? If you are looking for a payment option to secure your trade deals, then choosing a Letter of Credit can be the right choice for you! Now you can get the required LC MT700 at ZERO Collateral from reputed banks at minimum service charges.