Dear L/C Expert,
M gonna start trading company in dubai .Our company gonna buy product from China and will sell to the end user in UAE.As the order of fly ash is carried out in huge volume like 1000-3000 Tons/month.
So in such orders payment term is generally L/C at sight .We are only trader we are not the end user .We only work on profit basis like 15-20 % nor we keep this material in stock.
Now if my client (End User)gives me LOI and confirmed the order than who gonna pay for LC opening (bank charges).I think buyer(end user) is the one who pay will pay these charges(1 st case)?.
When my client(end user) will confirm order than i will place order to supllier in China .As the payment term will L/C so who gonna pay L/C opening charges me or supllier in china( 2nd case) .
As L/C amount varries between USD 80,000.00- 240,000.00 and our profit will be only USD 5,000-15,000(approx).
So I want know in such case what should be best payment terms in case of fly ash trading or cement trading
How much will be L/C opening charges ? for that Amount 80,000-240,000 USD.
waiting for your response.
Regards
brokers/traders and LCs
May I suggest the following:
1) have buyer open an LC and finance your purchase through internetlc . They will finance deals based on confirmed LCs
2) Transferable LCs I believe will not be your solution. Your buyer will see who your source is. Also you cannot reduce the amount of the LC to take your commission. Your seller will know how much your commission is etc...
3) Back to back LCs: Two LCs (you are the beneficiary in regards to your buyer and applicant in regards to your seller). The amouns can be different, but the description of the docs has to be failry identical in order for you to get paid when you have to pay. Replace your invoice for your seller's invoice.