PROCEDURES VANILLA VERSION
STEP 1 - LOI <ul><li>Buyer issues LOI - made out to Seller </li></ul><ul><li>LOI Specifies product, quantity,duration of c...
STEP 2 - FULL CORPORATE OFFER <ul><li>Seller reverts with an exclusive FCO in response to the Buyer’s LOI </li></ul><ul><l...
STEP 3 - IRREVOCABLE CORPORATE PURCHASE ORDER <ul><li>Upon receipt of Seller’s FCO, Buyer signs FCO and returns the FCO to...
STEP 4 - ICPO SIGNATURE &  DRAFT CONTRACT <ul><li>Seller signs ICPO and returns ICPO to Buyer along with Seller’s contract...
STEP 5 - SIGNATURE OF CONTRACTS <ul><li>Buyer then signs and seals the contract in six original sets and returns all six s...
STEP 6 - PROOF OF FUNDS <ul><li>Buyer’s bank sends POF via MT760 to Seller’s bank </li></ul><ul><li>When the MT760 confirm...
STEP 7 - SHIPPING SCHEDULE & PERFORMANCE BOND <ul><li>Upon verification of POF Seller will provide Buyer with shipping sch...
STEP 8 - PROOF OF PRODUCT BANK TO BANK <ul><li>After loading the product onto the required vessel Seller’s bank will furni...
STEP 9 - DELIVERY & PAYMENT <ul><li>Buyer’s bank will furnish the financial instrument for payment to Seller’s bank </li><...
STEP 10 - PENALTY FOR  NON-PAYMENT <ul><li>Failure by the Buyer to pay within 72 hours of delivery, inspection and accepta...
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Vanilla Procedures

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Ever want to deal in commodities make sure you know the correct procedurs

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Vanilla Procedures

  1. 1. PROCEDURES VANILLA VERSION
  2. 2. STEP 1 - LOI <ul><li>Buyer issues LOI - made out to Seller </li></ul><ul><li>LOI Specifies product, quantity,duration of contract, monthly shipments, discharge port, and method of payment/banking instrument and bank details </li></ul><ul><li>LOI must be on Corporate Letterhead and signed and dated by an officer of the company with company registration no. and scanned and sent in PDF format </li></ul><ul><li>The preferred banking instrument should be by way of a bank guarantee for 1 Year + 1 month, or as a Revolving Standby L/C or a Standby L/C </li></ul><ul><li>The stronger the instrument the better the price for the Buyer preferably from a top 10 world bank </li></ul>
  3. 3. STEP 2 - FULL CORPORATE OFFER <ul><li>Seller reverts with an exclusive FCO in response to the Buyer’s LOI </li></ul><ul><li>The FCO will reflect the Buyer’s request for product and Seller’s pricing </li></ul><ul><li>Each FCO issued by Seller has a tracking reference number pertaining to the Buyer’s LOI and will be used on all documentation thereafter </li></ul><ul><li>All Seller’s FCO’s are exclusive and strictly confidential to the Buyer and are not for distribution or circulation to any other parties other than the Buyer’s bank </li></ul>
  4. 4. STEP 3 - IRREVOCABLE CORPORATE PURCHASE ORDER <ul><li>Upon receipt of Seller’s FCO, Buyer signs FCO and returns the FCO to Seller along with their ICPO within 7 days. ICPO must mirror Seller’s FCO </li></ul><ul><li>The ICPO must be endorsed by the Buyer’s bank </li></ul>
  5. 5. STEP 4 - ICPO SIGNATURE & DRAFT CONTRACT <ul><li>Seller signs ICPO and returns ICPO to Buyer along with Seller’s contract </li></ul>
  6. 6. STEP 5 - SIGNATURE OF CONTRACTS <ul><li>Buyer then signs and seals the contract in six original sets and returns all six sets to Seller </li></ul><ul><li>Seller upon receipt of the above signs and seals all six contracts and returns three copies to the Buyer along with a pro forma invoice for the total contract value </li></ul>
  7. 7. STEP 6 - PROOF OF FUNDS <ul><li>Buyer’s bank sends POF via MT760 to Seller’s bank </li></ul><ul><li>When the MT760 confirms POF to Seller’s bank, the Buyer’s bank accepts liability for a USD$10 million penalty clause for failure to pay as per STEP 10 according to the maximum penalty allowable under ICC regulations </li></ul>
  8. 8. STEP 7 - SHIPPING SCHEDULE & PERFORMANCE BOND <ul><li>Upon verification of POF Seller will provide Buyer with shipping schedule and documents with ETA </li></ul><ul><li>Seller’s bank will provide Buyer’s bank with 2% Performance Bond </li></ul>
  9. 9. STEP 8 - PROOF OF PRODUCT BANK TO BANK <ul><li>After loading the product onto the required vessel Seller’s bank will furnish Buyer’s bank with POP which will include certificates of origin, bills of lading, shipping schedules, and insurance confirmation </li></ul>
  10. 10. STEP 9 - DELIVERY & PAYMENT <ul><li>Buyer’s bank will furnish the financial instrument for payment to Seller’s bank </li></ul><ul><li>The cargo is delivered, independently inspected and accepted in the destination port </li></ul><ul><li>Buyer’s bank upon receipt of confirmation of the above authorises via SWIFT MT103 an unconditional clean payment to Seller’s nominated bank </li></ul><ul><li>The cargo can then be discharged and legal ownership then transfers to the Buyer </li></ul>
  11. 11. STEP 10 - PENALTY FOR NON-PAYMENT <ul><li>Failure by the Buyer to pay within 72 hours of delivery, inspection and acceptance of the cargo will result in a penalty payment of USD$10 million by the Buyer’s bank to Seller’s nominated bank as referred to in STEP 6 - Proof of Funds </li></ul>

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