I had a querry.
We have received L/C and now we want to get the the L/C discounted from bank before shipment and producing the documents to advising bank. Can advising bank discount the L/C and credit the funds to our bank account.
What should be mentioned in L/C and what all documents are required to get the L/C discounted
If L/C is transferable what will be your answer
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I think what you need is a red clause L/C.
Red clause L/C can provide you financing before you produce the shipping documents.
The requirement is usually simple a draft, a simple receipt and/or a beneficiary statement that you will ship the goods within the timeframe provided in the L/C (or the agreed contract). But bear in mind, not every bank can give you financing for this scheme. This is because banks will also think for the safety of their claim that they will get paid, and that they will usually send the draft and your receipt on collection basis for payment. Only if they have the payment, they will credit the funds to your account.
For this red clause scheme, this is just like your buyer is financing your company for goods production before you can do shipment.
The terms usually put on the L/C are:
-the payment terms, usually 20% (or more) to be paid at sight (upon presentation the the already mentioned documents)
-80% (or less) to be paid upon presentation of your normal shipping documents
The transferable thing does not have any correlation to this discounting matter.
I hope this helps.
We have recently discussed this issue in response to another question. Briefly:
Hope I am clear on this issue?