The world of global trade has been significantly growing at an increasing rate. Nowadays, all the developed and developing countries are indulging in import and export of goods and services to meet the emerging consumer demands in their country. However, to make these trade transactions to operate in a smooth way, importers and exporters often opt for trade finance services. The use of trade finance services not only just make global transactions easier, but also facilitate international trade without monetary issues, glitches or hassles.
The term “Trade Finance” refers to the different types of trade finance instruments that can allow you to trade internationally without blocking your cash funds. These instruments bridge the gap between the importers and exporters, adding a third party to enter into the contract, as a guarantor. By doing so, it will help to reduce the risk involved and make it easier to do trade.
Different Types of Trade Finance Instruments Letter of Credit – Acts as a written undertaking that serves as a guarantee for payments made to a specified person, once the specified conditions are met. Standby Letter of Credit – It’s a guarantee issued by a bank to ensure that the payment will be made, only if their client cannot fulfill the payment obligations. Bank Guarantee – Serves as written undertaking or a guarantee issued from a Bank that ensures that if the applicant fails to make the payment or defaults in the agreed contract, the bank will be liable for it. Bank Comfort Letter – Serves as a notification letter to notify the supplier that the buyer has enough cash funds to proceed with the purchase of bulk goods and commodities. Advance Payment Guarantee – Issued on behalf of contractor/supplier and in favor of developer/buyer to ensure that the advance payment will be returned to the client, in case, if the contractor/supplier does not fulfill its obligations performing the task or on the delivery of goods or services. Performance Bond – A guarantee issued by a bank, guaranteeing the fulfilment and the positive completion of a particular project or a trade deal. Bid Bond – Issued by a bank on behalf of a bidder to guarantee the developer that the bidder will take on the job, if awarded. Is Trade Finance Services Right for Your Business? If your business is doing international trade transactions, then it’s likely more vulnerable to any risks associated with currency fluctuation, shipment delays, and payment issues and so on. So, to safeguard your business from risks involved in global trade, you’ll need to choose trade finance services. Recent statistics has been stated that more than 80-90% of traders depend on trade finance services to manage their trade without liquidating their working capital. How Import Letter of Credit Can Help You? Being one of the leading Bank Instruments Providers in Dubai, Import Letter of Credit can help traders & contractors by providing the financial instruments on from rated European Banks. Our services include: DLC MT700, SBLC MT760, BG MT760 and BCL MT799. With over 30 years of experience, we have helped more than 25, 000 traders to conclude their trade deals successfully. See how we served the trade finance needs of our clients globally. To avail our trade finance services, submit your requirements today! Comments are closed.
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