Letters of Credit - How many are they?

There are several different kinds of Letters of Credit, with different benefits and utilities. What kind of Letter of Credit should be used will depend on what your needs are.

THE NEGOTIABLE LETTER OF CREDIT - Probably the most know and used. Might be confirmed or not. Opened from a buyer to a seller through the bank system, clearly states, goods, amount, payment time (at sigh or deferred) and validity. When you present documents to the advising/negotiating/ confirming bank, (and if everything is in order) you'll receive your payment in the agreed timming

THE TRANSFERABLE LETTER OF CREDIT - Most like the negotiable, but with the characterisitic that it can be transfered in part or parts (amount and quantities) from the first beneficiary to a second beneficiary, maintaining the specific details like documents required, dates, Port of shipment etc. And be the time of negotiating documents, the first beneficiary usually only has to present it's own invoices and drafts (if necessary). It's usefull when you are selling goods that you have to buy to someelse.

THE RED CLAUSE LETTER OF CREDIT - In this Letter of Credit the orderer allows a certain amount to be payed to the beneficiary in advance. Usually this Letter of Credit is used when, special manufacturing equipment or raw materials have to be purchased for producing an order. In this case the Buyer takes some risk in financing (in advance) the seller.

THE BACK-TO-BACK LETTER OF CREDIT - Basically when you receive a Letter of Credit non transferable and you need to purchase goods a Back-to-back can be your solution. This Letter of Credit is suported by another Letter of Credit where you are the beneficiary. When opening a Back-to-Back some cautions have to be taken into consideration, in order that the received documents can be used and negotiated for the initial Letter of Credit

THE REVOLVING LETTER OF CREDIT - When the amount of the Credit is used, it is reposted from the beginning. This Letter of Credit is most commonly used when we are dealing with regular shipments (for instance 2500MT monthly) It sates for how may shipments and for how long this Letter of Credit will be valid

THE STAND-BY LETTER OF CREDIT - It's a common payment term in countries like USA. Basically it works as a payment warranty, if buyer fails to pay within the agreed timming, then seller presents documents for negotiation with the bank

Although knowing that this isn't an exaustive presentation on Letter of Credits, I truly hope that it will be helpfull for someone.

If you have any doubt concerning this or other relted subject, please call Mr.Paulo Nunes Porto - e-mail: paulonunes.porto@gmail.com or at the mobile phone (+351 96 9446897)

O Papel dos Agentes de Compra em Portugal

Muitas empresas que com regularidade adquirem produtos de origem portuguesa, possuem em Portugal o que se poderá designar como Centrais ou Agentes de Compras. Com maior ou menor dimensão estas entidades (individuos ou empresas) tem por função a procura, aquisição, controle e embarque dos bens e serviços requeridos pelo cliente.

Ao analisarmos a realidade portuguesa, esta opção toma contornos de necessidade básica. Em Portugal, muitas das empresas que estão a vender e/ou tentar vender os seus produtos no mercado de exportação, não só não dispoem de um departamento com pessoal qualificado para fazer face ás diversas situações que surgem ao se operar no mercado de exportação, como ainda encaram as vendas no mercado de exportação da mesma forma que encaram as vendas no mercado interno.

Ao procurarem produtos portugueses alternativos os importadores debatem-se com inumeras dificuldades, desde a barreira da língua,  a morosidade dos processos burocraticos locais,  atrasos constantes na entrega das encomendas, inflexibilidade dos fabricantes face aos meios de pagamento comumente utilizados no Comércio Internacional, a custos elevados no transporte das mercadorias por serem muitas vezes obrigados a recorrer a soluções desadequadas, como o embarque por via aerea de produtos que poderiam seguir por navio se as coisas fossem efectuadas correctamente até ao envio de contentores maritimos com o espaço subaproveitado porque um ou mais fornecedores atrasou entregas.

Um Agente em Portugal tem entre outras funções a de estabelecer com os fornecedores um contacto de proximidade e controle quer a nivel de preços, quer de qualidade quer ainda a nivel de prazos de entrega. A optimização de entregas e transporte será outra das suas funções. A coordenação entre as condicionantes dos fornecedores e as necessidades do importador constituem a base operacional destes agentes.

È para reduzir os custos dos importadores e, melhorar a qualidade dos serviços que lhes são prestados pelas empresas portuguesas que existimos. Devido ao nosso conhecimento das realidades do dia-a-dia das empresas portuguesas, conseguimos fazer nossas as preocupações dos nossos clientes e, em conjunto,  encontrar soluções.

Assim a existência de um Agente em Portugal é para muitas empresas uma necessidade vital que lhes irá permitir que se empenhem a 100% no desenvolvimento do seu negócio,  evitando o desperdício por parte do empresário de tempo e recursos.

Letter of Credit

When the buyer and the seller don't know each other, how do we prevent the business from failing ? And at the same time protect the interests from both the Buyer and the Seller?

The most used way is the use of a Letter of Credit. By being a Bank to Bank payment agreement this instrument is suitable for the majority of situations concerning International Commerce, once the payment goes from the Buyer's Bank to the seller's bank directly and has the Buyer's Bank garantee that if certain conditions are entirely fullfilled the payment will be done in due time.

As easy as this may look, both the buyer and the seller have to take some precautions if they want theyr interests duly safeguarded.

The main intervenients in a Letter of Credit are:
Orderer: The person that instructs the bank to open the Letter of Credit, usually the Buyer
Beneficiary. The person to receive the payment, usually the Seller
Issuing Bank: The Bank that issues(opens) the Letter of Credit
Notifying Bank : The Bank nominated to notify / Advise the Beneficiary that a Letter of Credits in his favour has been opened with the following details
Confirmation Bank: If required by the Issuing Bank the Letter of Credit can be "Confirmed" by another Bank,usually the notifying bank.

A Letter of Credit confirmation means that the Bank adding it's confirmation to a certain Letter of Credit takes the responsability to pay the due amount of the Letter of Credit if all the requirements mentioned in the Letter of Credit are duly fullfilled by the Beneficiary.

So if you're a Seller you must ask your customer to issue an Irrevocable and Confirmed Letter of Credit and check out carefully all the terms of the Letter of Credit you receive, including documentation, validity dates, goods description, etc

If you're a Buyer you must make sure that validity and shipping dates, goods description, goods origin and required documents do really meet your needs so you may be able to proceed with import proceedures without problems.

If you need further information please call Paulo Nunes Porto - e-mail: paulonunes.porto@gmail.com or at the mobile phone (+351 96 9446897)