Advantages of LC to Importer
The import-export business is one of the fundamental pillars of the global economy. This business involves the transfer of goods and services from one country to another. Importers transact with exporters in several different ways, including advance payments, Bank Guarantees, and Letters of Credit. One of the most common ways is to make use of a Letter of Credit (LC). An LC is a financial instrument that has multiple advantages for an importer as well as the exporter. This article discusses some of these advantages that could prove to be highly beneficial for importers.
The biggest benefit for importers is that LCs ensure that they receive the goods in a timely manner. This helps them in avoiding a situation where the goods are not delivered on time and, in turn, they are not able to fulfil their commitments. There are many cases where the importer needs the delivery of goods before a deadline. They may have to re-process the goods or sell them on to their customers. An LC ensures that they can be free of any worries with regards to the goods. The second benefit is that an LC makes sure that the documentation process is expedited. Documentation can be a major headache for an importer. An LC makes sure that this process takes place quicker. By using an LC, an importer is also able to get customs clearance more easily. This is a great advantage because clearing customs can be a major task for any importer. By making use of an LC, they are able to import the goods in a streamlined manner. Another major benefit is that it negates the risk of non-performance of export duties by the exporter. An LC guarantees that the goods will be delivered to the importer.
In addition, LCs can also help importers in growing their businesses. This is because an LC allows them to trade with new partners around the world. They can also form new trade partnerships with exporters from any country. If they use an LC, they are able to trust new vendors without having to worry about the delivery of the goods. For example, if a German importer wants to import from Bangladesh for the first time, they can take the help of an LC. This will ensure that they will receive the goods under all circumstances. Also, an LC is highly customisable from the point of view of the importer as well as the exporter. This means that the terms and conditions of the LC can be discussed between the importer and the exporter. Both parties are allowed to insert clauses which ensure that the transactions between them will go ahead. This is extremely important because importers and exporters are often engaged in disputes regarding the delivery schedule as well as the quality of goods delivered. An LC ensures that all such worries are avoided.
By using an LC, importers can also create a payment schedule which is favourable to them. This means that they are able to release the payment to the exporters only when all conditions are satisfied. Similarly, by making use of an LC, importers can be assured that they need to make the payment only when the evidence regarding the delivery of goods has been provided. This allows them to import goods seamlessly.
Thus, to sum up, it is evident that an LC is highly beneficial for importers around the world. There are several banks that offer customisable LCs to the importers. One such bank is Euro Exim Bank.
Euro Exim offers various types of LCs, including revolving LCs, deferred LCs, and commercial LCs. The various LC offerings of the bank can be compared here.
