Method For International Financing
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  • We offer fresh cut bank instrument for lease/sale, such as BG, SBLC, MTN, Bank Bonds, Bank Draft, T strips and other. Leased Instruments can be obtained at minimal expense to the borrower compared to other banking options and we also discount/monetize BG's.
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    If in need of our services, contact me for detail information.
    Thank you,
    Mr.Arvin Baileigh
    email:arvinbaileigh23@gmail.com
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  • My name is Rex Decker and I am a Recruiter working in Denver, CO. I noticed your email address from a blog about ISP98 and I wanted to network with you regarding a position in Denver Colorado. Please read the below job description and if you or anyone that you know would be interested in this opportunity please send me a resume ASAP! I will call you when I have your information.

    I welcome referrals and any excuse to network!

    Rex Decker

    Title: Supervisor, Trade Services/Letter of Credit Operations
    Location: Denver, CO (a full comprehensive relocation package is available!)

    My client is a leading participant in the U.S. Government’s GSM credit guarantee program, a program designed to promote the export of U.S. agricultural commodities. Under this program the clients lends to foreign nations to fund these exports.

    The Role:

    The Supervisor leads the trade services staff in its efforts to provide documentary products and services to customers involved in international trade, and the issue of domestic and international Standby Letters of Credit (L/C). This individual allocates staff resources in support of the international banking group’s lending activity and maintains compliance with internationally accepted regulations governing letters of credit as well as USDA policies relating to Commodity Credit Corporation (CCC) programs to ensure the quality of the bank’s assets. The supervisor also advises and coordinates the structuring of transactions with an emphasis on customization with the Legal Department and relationship/credit managers to meet customer needs. This individual also works with the staff on resolving discrepancies with exporters, importers and correspondent banks.

    This role has a peer who supervises daily activities and coordinates workflow of the Trade Services Processing team. Individual competencies, business need, and development initiatives may allow for these peers to exchange leadership responsibilities.

    Qualifications:

     Bachelor’s degree in relevant discipline and 5 years experience in most or all phases of Letter of Credit and trade transaction processing including issuance and negotiation for Standby and commercial letters of credit with 2-3 years supervisory/management experience, preferably in banking or financial services industry; or appropriate combination of education and experience.
     Certified Document Specialist Certification (CDCS) Preferred.
     Thorough knowledge from an issuing bank perspective of the ICC Uniform Customs and Practice for Documentary Credit.
     Working knowledge of International Standby Practice (ISP98).
     Established knowledge of documentary collection processes and ICC Uniform Rules for Collections.
     Proven ability to apply the basic principles of accounting.
     Demonstrated tact and persuasiveness, excellent organization and interpersonal, oral and written communication skills in dealings with foreign and domestic customers/borrowers/financial institutions.
     Strong computer skills, including intermediate to advanced competency in using MS Office suite products as well as proprietary banking systems and databases.


    Rex Decker
    IT Works International
    Director of Recruiting
    Cell: +1 479-633-4125
    rdecker@itworksintl.com
    decker_rex@yahoo.com (yahoo IM)
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Method For International Financing Method For International Financing Presentation Transcript

  •  
  • LETTERS OF CREDIT As a Method for International Financing Presented by Laura Kraus April 26, 2005 NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”
  • PARTIES TO INTERNATIONAL TRANSACTIONS
    • Buyer: Seller:
      • Importer - Exporter
      • Applicant - Beneficiary
      • Account Party - Drawer
      • Drawee
    • Buyer’s Bank: Seller’s Bank:
      • Issuing Bank - Advising Bank
      • Paying Bank - Confirming Bank
      • Collecting Bank - Negotiating Bank
      • - Remitting Bank
    NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”
  • LETTERS OF CREDIT The Basics
    • Definition: A documentary credit is a conditional bank undertaking of payment. It is a written undertaking by a bank (issuing bank) given to the seller (beneficiary) at the request, and on the instructions of the buyer (applicant) to pay at sight or at a determinable future date up to a stated sum of money, within a prescribed time limit and against stipulated documents. The issuing bank is putting out its credit and good name for the sake of the buyer.
    NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”
  • LETTERS OF CREDIT The Basics
    • Buyer: Because a documentary credit is a conditional undertaking , payment is made on the behalf of the buyer against documents , which may represent the goods and give him rights in them.
    • Seller: Because the documentary credit is a bank undertaking, the seller can look to the bank for payment, instead of relying upon the ability or willingness of the buyer to pay.
    • However, because the undertaking is conditional, the seller only has the right to demand payment if he meets all the requirements of the credit. It is therefore, unwise for the seller to proceed with shipment until he is aware of these requirements and is satisfied that he can meet them.
    NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”
  • LETTERS OF CREDIT The Basics
    • Summary - Documentary credits, therefore:
    • Are an arrangement by banks for settling international commercial transactions.
    • Provide a form of security for the parties involved.
    • Ensure payment, provided that the terms and conditions of the letter of credit have been fulfilled.
    • Mean that payment by such means is based on documents only, and not on merchandise or services involved
    NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”
  • LETTERS OF CREDIT What They Can and Cannot Do
    • They can:
      • Provide a means of prompt payment to the seller provided the credit details are fulfilled.
      • Eliminate extensive credit investigation of the buyer, since the seller’s credit risk has been assumed by the issuing and/or confirming bank.
      • Assure the buyer it will only be required to pay if the conditions of the credit are met.
      • Provide a base for a bank to engage in temporary inventory and receivable cycle financing.
  • LETTERS OF CREDIT What They Can and Cannot Do
    • They cannot:
      • Substitute for the integrity of the seller or make background and integrity checking unnecessary.
      • Lend soundness to transactions that were not basically sound in their inception.
      • Absolve the seller or buyer from contractual liability.
      • Remove the exchange risk.
      • Guarantee that shipment will be made by seller.
    NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”
  • LETTERS OF CREDIT What They Can and Cannot Do
    • They cannot :
      • Letters of credit, by their nature, are separate transactions from the sales or other contract(s) on which they may be based and banks are in no way concerned with or bound by such contract(s); even if any reference whatsoever to such contract(s) is included in the credit. (Article 3, UCP 500).
    NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”
  • LETTERS OF CREDIT
    • A basic tenet of letters of credit is that banks handling letters of credit deal in documents and documents only. Any dispute with regard to quantity or quality of merchandise bears no relation to the bank’s responsibility to examine documents as presented under the letter of credit, and to make their decision as to the acceptability of the documents solely based upon those documents versus the letter of credit terms and conditions.
    NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”
  • TYPES OF LETTERS OF CREDIT
    • Merchandise, Commercial, Trade : The majority of LCs issued are in payment for goods in shipment or current services performed. Payment is normally made against documents for goods shipped (Article 1,2, & 9 UCP500)
    • Standby : This type of LC functions like a guarantee. This type of credit can only be drawn against a credit agreement. It is a definite undertaking of the issuing bank, ICC 590, ISP 98
    NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”
  • TYPES OF LETTERS OF CREDIT
    • Revocable : A revocable letter of credit may be amended or canceled by the issuing bank at any moment and without prior notice to the beneficiary (Article 6 & 8, UCP 500)
    • Unconfirmed : Bears only the guarantee of the issuing bank. The beneficiary should look to the credit worthiness of only the issuing bank, and not to any intermediary. (Article 9, UCP 500)
    • Confirmed : Is a credit in which a second guarantee is added to the letter of credit by another bank. (Article 9, UCP 500)
    NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”
  • TYPES OF LETTERS OF CREDIT
    • Sight : Payment is at sight, which means that the drafts and documents are honored, if in order, by making payment without delay.
    • Time, Usuance : The draft honored by accepting it for payment at a future date. Payment is delayed until the maturity of the draft.
    • Revolving Credit : One where the amount is renewed or reinstated without specific amendment to the credit being needed. It can revolve in relation to time or value.
    NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”
  • TYPES OF LETTERS OF CREDIT
    • Red Clause Credit : Authorizes the advising or confirming bank to make advances to the beneficiary before presentation of the documents.
    • Transferable Credit : Can be transferred by the original beneficiary to one or more other parties. It is normally used when the first beneficiary does not supply the merchandise himself, but is a middleman and wants to transfer all or part of his rights to the actual supplier (Article 48, UCP 500)
    • Back-to-Back Credit : The seller, as beneficiary of the first credit, offers it as “security” to the advising bank for issuance of a second credit.
    NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”
  • LC Parties - LC Issuance Buyer/ Applicant Issuing Bank Seller/ Beneficiary Advising Bank Seller/ Beneficiary NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise” Buyer applies for LC Buyer’s bank issues LC and sends to seller’s bank Sales contract Seller’s bank authenticates LC and sends to seller Sales contract
  • LETTER OF CREDIT Instructions
    • Date:
    • To: Buyer
    • Gentlemen:
    • Following are the particular details we wish to have included in your documentary Letter of Credit, issued in reply to our Pro-Forma invoice number 2005-001, dated April 26, 2005.
    • Please instruct your bank to open and issue this credit in accordance with the following terms and subject to the Uniform Customs and Practices for Documentary Credits, International Chamber of Commerce Publication 500.
    NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”
  • LETTER OF CREDIT Instructions
    • We have made every effort in these instructions to provide you with terms, which can be easily accommodated. If you or your bank are unable to comply with these terms and conditions, please consult with our offices prior to the issuance of the credit to avoid delay or non-shipment.
    • The Letter of Credit shall be irrevocable and issued under the rules of UCP 500.
    • The credit shall be advised/confirmed by:
          • Seller’s Bank
          • Address, City, State, Zip Code
          • ABA #, Account Number
    NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”
  • LETTER OF CREDIT Instructions
    • The credit shall be freely negotiable.
    • The credit shall show as the beneficiary the exact name of: _________________
    • The credit shall be payable in USD, in the amount of $___________.
    • The credit shall be payable at ____(Sight) ________(Time).
    • The credit shall show that all banking charges except for Seller’s Bank charges are for the account of the applicant. All reimbursement charges are for the account of the applicant.
    NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”
  • LETTER OF CREDIT Instructions
    • Confirmation charges are for the applicant.
    • The credit shall show that all charges for amendments to the credit, including related communications expenses, are for the account of the applicant.
    • Partial shipments are permitted.
    • Transshipments are Not allowed.
    • Shipment from: Any USA port/airport
    • The expiration date shall be: ___________
    • The latest shipping date is: ____________
    NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”
  • LETTER OF CREDIT Instructions
    • Full Set “Clean on Board” Ocean bills of lading/airway bills consigned to the Issuing Bank .
    • Other documents: ________________________ _______________________________________.
    • Your cooperation is very much appreciated. Please contact us for any questions that you may have.
    • Sincerely,
    NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”
  • BENEFICIARY SHOULD REVIEW LC TO VERIFY:
    • Correct Name and Address
    • Sufficient Credit Amount
    • Documents Required are Obtainable and According to Terms of Sale
    • Points of Shipment and Destination are Correct
    • Insurance Coverage Requirements are Obtainable and According to Terms of Sales
    NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”
  • BENEFICIARY SHOULD REVIEW LC TO VERIFY:
    • 6. Shipping Date Allows Sufficient Time to Dispatch the Goods
    • Expiration Date Allows Sufficient Time for Presentation of Draft and Documents
    • Description of Goods is Correct and Simply Stated
    NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”
  • Incoming Admin ,,MESSAGE ADVICE>> PRT: _LTA9978: SEQ: 00231 LOC: intl que: SWFT020prtc TRN: 970404-000249 <<<intranet>>> 26 APRIL_2005 08:27:57.73
    • {1: FO1FUNBUS33AINT46520884568
    • {2: 07001522970404KOFBKRSEAXXX2047728792979404044ON}
    • {3: {108:IAMGR04}}
    • SWIFT Message Text
    • Output time: 04:40 Output sequence number: 084568
    • S/FUNBUS33AINT
    • WACHOVIA BANK NATIONAL ASSOCIATION
    • INTERNATIONAL DEPARTMENT
    • Input time: 15:22 Input sequence number: XXXXXX
    • S/KOFBKRSEA.XXX
    • KOREA FIRST BANK – SEOUL
    • 53-1 1-KA CHUNGMU RD.
    • JOONG KU
    • Swift Authenticated Message Mac; XXXX
    • Issue of Documentary Credit (TYPE: 700)
    • :27 /Sequence of total:
    • 1/1
    NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”
    • :40A: /Form of documentary credit:
    • IRREVOCABLE
    • :20 /Documentary Credit Number
    • MI8677 04NU000032
    • :31C /Date of Issue:
    • Date: 050426
    • :31D /Date and Place of Expiry:
    • Date: 050930 Place AT NEGOTIATION BANK’S COUNTER
    • :50: Applicant:
    • PRIZE IMPORTERS
    • ANYWHERE, KOREA
    • :59: /Beneficiary:
    • /XYZ EXPORTERS
    • SOMEWHERE, USA
    • :32B: /Currency Code, Amount:
    • 538143.65 USD
    • :41D /Available with …. By ….
    • ANY BANK
    • BY NEGOTIATION
    NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”
    • :42C: /Drafts at:
    • 90 DAYS AFTER SIGHT
    • :42A; Drawee:
    • S/KOFBUS6L
    • KOREA FIRST BANK, LOS ANGELES AGENCY
    • SUITE 800
    • LOS ANGELES, CA, US
    • :43P: /Partial Shipments:
    • NOT ALLOWED
    • :43T: /Transshipments:
    • NOT ALLOWED
    • :44A: /Load on board, Dispatch:
    • DALLAS, TEXAS US
    • :44C: /Latest date of ship:
    • 050907
    • :45A: /Description of goods and/or services:
    • DETAILS ARE AS PER YOUR PROFORMA INVOICE DATED
    • MARCH 31, 1997
    • FCA DALLAS
    NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”
    • :46A: /Documents required:
    • +SIGNED COMMERCIAL INVOICE IN QUINTUPLICATE
    • +PACKING LIST IN TRIPLICATE
    • +FULL SET OF CLEAN ON BOARD OCEAN BILL OF LADING MADE OUT TO THE ORDER OF
    • KOREA FIRST BANK MARKED FREIGTH COLLECT AND NOTIFY ACCOUNTEE
    • +FULL SET OF INSURANCE POLICIES OR CERTIFICATES, ENDORSED IN BLANK FOR 110
    • PERCENT OF INVOICE VALUE, STIPULATING THAT CLAIMS ARE PAYABLE IN THE
    • CURRENCY OF THE DRAFT AND ALSO INDICATING A CLAIM SETTLING AGENT IN KOREA.
    • INSURANCE MUST INCLUDE: THE INSTITUTE CARGO CLAUSE: (A)
    • +CERTIFICATE OF ORIGIN
    • :47A; /Additional Conditions:
    • ALL BANKING COMMISSIONS AND CHARGES
    • INCLUDING REIUMBURSEMENT CHARGES OUTSIDE
    • OF KOREA ARE FOR ACCOUNT BENEFICIARY
    • :48: /Period for presentation:
    • DOCUMENTS MUST BE PRESENTED WITHIN 21 DAYS AFTER THE DATE OF
    • THE SHIPMENT
    • :49: /Confirmation instructions:
    • WITH
    NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”
    • :53A: /Reimbursement Bank:
    • S/KOFBUS6L
    • KOREA FIRST BANK, LOS ANGELES AGENCY
    • SUITE 800
    • LOS ANGELES, CA, US
    • :78: /Instructions to paying bank:
    • REIMBURSEMENT IS SUBJECT TO ICC URR 525
    • ACCEPTANCE COMMISSIONS AND DISCOUNT CHARGES ARE FOR BUYER’S A/C
    • DRAFTS MUST BE SENT TO DRAWEE BANK FOR REIMBURSEMENT AND ALL
    • DOCUMENTS TO US IN TWO CONSECUTIVE AIR MAILS. PAYMENT UNDER THIS
    • L/C IS TO BE MADE AT SIGHT BASIS REGARDLESS OF DRAFTS TENOR
    • :72: /Sender t oReceiver Information:
    • THIS CREDIT IS SUBJECT TO
    • U.C.P. (1993 REVISION) I.C.C.
    • PUBLICATION NO. 500.
    • -}
    • {5:
    • {MAC:FAB53E6E}
    • {CHK:B637D2DECCDE}
    • {DLM:}}
    NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”
    • 78: Instructions to Paying Bank:
    • REIMBURSEMENT IS SUBJECT TO ICC URR 525
    • ACCEPTANCE COMMISSIONS AND DISCOUNTS CHARGES ARE FOR BUYER’S A/C
    • DRAFTS MUST BE SENT TO DRAWEE BANK FOR REIMBURSEMENT AND ALL DOCUMENTS TO US IN TWO CONSECUTIVE AIR MAILS
    • PAYMENT UNDR THE L/C IS TO BE MADE AT SIGHT BASIS REGARDLESS OF DRAFT’S TENOR.
    • 78: Instructions to Paying Bank:
    • SPECIAL INSTRUCTIONS TO THE NEGOTIATING BANK:
    • NEGOTIATING BANK MUST SEND DRAFTS TO DRAWEE BANK AND ALL DOCUMENTS OT US
    • I.E. THE BANK OF TOKYO-MITSUBISHI, LTD., GLOBAL SERVICE BANKING DIVISION P.O. BOX 191, NIHONBASHI, TOKYO 103-91, JAPAN IN2. SPECIAL INSTRUCTIONS TO THE DRAWEE BANK:’
    • IN REIMBURSEMENT DEBIT OUR HEAD OFFICE ACCOUNT WITH YOU
    • ________________________________________________________________________________________
    • 78: Instructions to Paying Bank:
    • T.T. REIMBURSEMENT PROHIBITED
    • NEGOTIATING BANK MUST FORWARD DRAFTS TO DRAWEE BANK AND ALL DOCUMENTS TO US IN TWO REGISTERED AIRMAILS.
    • WE AGREE THAT DRAFTS DRAWN IN COMPLIANCE WITH THE TERMS OF THIS CREDIT SHALL BE DULY HONORED ON DUE PRESENTATION.
    • 78: Instructions to Paying Bank:
    • PLS FORWARD ALL DOCUMENTS TO US.
    • (NO.264, CHUNG CHENG 4 TH ROAD, KAOHSIUNG, TIWAN, R.O.C.)
    • UPON RECEIPT OF THE RELATIVE DOCUMENT CREDIT CONFORMED, WE SHALL REIMBURSE ACCORDING TO
    • NEGOTIATING BANK’S INSTRUCTIONS
    NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”
  • LC Parties - LC Issuance Buyer/ Applicant Issuing Bank Seller/ Beneficiary Negotiating Bank NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise” The issuing bank debits the buyers account for the payment and releases the original documents After scrutinizing the documents negotiating bank forwards them to the issuing bank Seller presents documents under the LC to its bank Shipment On checking for compliance with LC terms the issuing bank reimburses the negotiating bank by debiting the buyer’s account On receiving the payment Seller’s account is credited
  • Incoterms
    • Considerations to keep in mind
      • Who has what responsibility?
      • More importantly who pays for what?
    • Knowing the terms correctly can be very beneficial
    • At the contract negotiation stage these issues need to resolved
    NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”
  • Range of Responsibilities Seller Buyer EXW FCA FAS FOB CFR CIF CPT CIP DAF DES DEQ DDU DDP Packing Forwarder Fees Loading at Origin Inland Freight Port Charges Export Clearance Insurance Ocean Freight Charges at Foreign Port Custom Clearance Custom Duties Delivery to Destination NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”
  • Incoterms 2000
    • EXW - Ex Works
    • FCA - Free Carrier
      • multimodal, container, air, rail, road
    • FAS - Free Alongside Ship
    • FOB - Free on Board (maritime only)
      • use FCA for all other types of carriage
    NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”
  • Incoterms 2000
    • CFR - Cost and Freight
      • on board only
    • CIF - Cost, Insurance and Freight
      • on board only
    • CPT - Carriage Paid to
      • in custody of carrier
    • CIP - Carriage and Insurance Paid to
      • in custody of carrier
    NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”
  • Incoterms 2000
    • DAF - Delivered at Frontier (rail, road)
    • DES - Delivered Ex Ship
    • DEQ - Delivered Ex Quay (cleared for import)
    • DDU - Delivered Duty Unpaid (place)
    • DDP - Delivered Duty Paid
    NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”
  • Incoterms 2000
    • General/ Multi-modal/ Container
      • FCA, CPT, CIP
    • Maritime Only
      • FAS, FOB, CFR, CIF, DES, DEQ
    • Non-existent
      • FOB Airport (now FCA)
      • FOR/FOT - Free on Rail/Truck (now FCA)
      • C&F - Cost and Freight (now CFR or CPT)
    NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”
  • LETTERS OF CREDIT Summary
    • Submit Pro-Forma LC to Buyer
    • Review LC When You Receive It
    • Move Documents as Quickly as Possible
    • Try to Direct LC to Your Bank
    • Request Freely Negotiable LC
    • Realize Risk of Consigning Bill of Lading to Buyer
    • Banks Will Not Look to Your Contract
    • The LC is Only as Good as the Issuing Bank
    NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”
    • THANK YOU
    NCMA World Congress 2005 “ Prime Time: Contract Management at the Core of the Enterprise”