The offered payment method can greatly affect the price offered by the Seller; generally the more secure the payment the cheaper the price.   Sellers are looking for more security in the payment method because of the high percentage of drop outs of Buyers paying by ordinary DLC, because this payment does not guarantee continuity.  Nevertheless, if you are wanting to trade with Chinese buyers, they will generally not offer any other payment option.

The payment instrument acceptable to the Seller can vary considerably with each seller and also with the particular commodity being traded – some Sellers are happy to accept IRDLC revolving for one month’s shipment value whilst other Sellers, such as Scrap merchants, may require a BG as security deposit held in trust for one or even two months shipment value as surety against the buyer dropping out of the contract.

So why do Buyers drop out?    In the past a buyer, to secure the best price, would contract a quantity say up to 12 times more than the quantity they actually required; they pay for 1 or 2 shipments and then drop out; after having obtained the benefit of a price offered for the much larger quantity.   Also buyers would drop out of a contract because they had since found a seller with a cheaper price, leaving the initial Seller with ships on contract and product stationary at the loading port incurring demurrage costs.For similar reasons, with contracts such as sugar, payment may be mandatory by FFBG with some sugar sellers.   Nevertheless our Seller’s payment options will always be clearly outlined in our Soft Offers and are almost always non-negotiable.

OUR PAYMENT OPTIONS

ALL payment instruments must be issued by a Top 50 Prime World Bank; please check our website for latest Top 50 list.

CONFIRMED, Irrevocable Letters of Credit give the seller the greatest protection, since sellers can rely on the commitment of two banks to make payment.    The Confirming Bank will pay even if the Issuing Bank cannot or will not honour the draft for any reason whatever.   In accordance with the additional risk assumed by the banks, however, confirmed, irrevocable Letters of Credit are more expensive than unconfirmed Letters of Credit.

The three (3) main payment options are:

 IRDLC –  Irrevocable, Transferable or Non-Transferable, Auto-Revolving for one month’s shipment value, Documentary Letter of Credit, Issued by (or Confirmed by) a Top 50 Prime World Bank, 100% at sight Port of Loading.

IRDLC + BG  – Unconditional Bank Guarantee for one month’s shipment value held as surety and then monthly payment by Irrevocable, Transferable or Non-Transferable, Auto-Revolving for one month’s shipment value, Documentary Letter of Credit, Issued by (or Confirmed by) a Top 50 Prime World Bank, 100% at sight Port of Loading.

FFBG – Fully Funded Bank Guarantee, Issued by (or Confirmed by) a Top 50 Prime World Bank.

There are other acceptable payment methods and also variations of these payment methods above applicable to certain commodities that our Sellers may accept, however these will be advised in our Soft Offers. Please clearly define your preferred payment when making your application for quotation.

PROCEDURE

Once we have given you a Soft Offer we require an LOI or ICPO from the Buyer with wording that mirrors the Soft Offer and which must include Buyer’s full banking coordinates.   To avoid any dispute regarding commission split at a later date we also require the Buyer, Buyer Mandate and all intermediaries to complete and sign an NCND/IMFPA and pass it to Sell Side for completion.   The Seller then issues an FCO or Draft Contract to the Buyer for acceptance.

PROOF OF FUNDS:

 Our Sellers always require POF (Proof of Funds) however this will vary as to when and how this is provided.    POF can be offered in a variety of ways.

 SOFT PROBE:

 Whilst permission for a Soft Prove which may be offered in the ICPO or LOI is nice, it is generally not acceptable as it is not a guarantee of any commitment to the contract in hand.

BANK COMFORT LETTER:  

A BCL should list a description of the goods, the quantity, the total contract value and the monthly revolving amount expressed in US Dollars. A BCL (Bank Comfort Letter) is becoming less acceptable by the day to both the Seller and the Buyer.   Very few USA Banks will issue BCLs because of previous instances where many Sellers have successfully sued the Buyer’s bank for failure of the Buyer to provide the payment.   Also BCLs have been fraudulently designed by Buyers and this has made such documents in doubt.

SWIFT CODE – TT SERVICE:

SWIFT Code (also known as SWIFT-BIC, BIC code, SWIFT ID or SO 9362) is a standard format of Bank Identifier Codes approved by the International Organization for Standardization (ISO).   It is the unique identification code of a particular bank. These codes are used when transferring money between banks, particularly for international wire transfers, and also for the exchange of other messages between banks. The most common acceptable method of providing POF is via SWIFT service Bank to Bank such as MT799, MT999.  Sadly, most USA banks won’t issue POF by this method either, because they can be held as legally responsible.

RUSSIAN OIL REFINERIES

 Many Russian Oil Refineries have been caught with high expense of registering Contracts with Russian Ministry of Energy and Buyers then unable to finance the deal – so the Russian Refineries have been trying for some time to solve this serious problem.    They tried to have the Buyer pay the Registration Costs upfront but this left the door open for scammers to represent themselves as a Seller – and fraudulently take the upfront payment.    They tried to have the Buyer deposit an amount of money in an Escrow account but that also attracted the scammers. So Buyers need to be carefully when selecting a Facilitator.   Our Sellers do not require any up-front payment.

TOP 50 PRIME WORLD BANKS 25 NOVEMBER 2015

BANK NAME COUNTRY
1. Industrial & Commercial Bank of China Ltd., Beijing CHINA
2. China Construction Bank Corporation, Beijing CHINA
3. BNP Paribas SA, Paris FRANCE
4. Agricultural Bank of China, Beijing CHINA
5. Bank of China Limited, Beijing CHINA
6. Deutsche Bank AG, Frankfurt am Main GERMANY
7. Barclays PLC, London UK
8. Credit Agricole SA, Paris FRANCE
9. Japan Post Bank Co. Ltd., Tokyo JAPAN
10. The Bank of Tokyo-Mitsubishi UFJ Ltd, Tokyo JAPAN
11. JPMorgan Chase Bank National Association, New York USA
12. Societe Generale, Paris La Defense, FRANCE
13. The Royal Bank of Scotland Group PLC, UK
14. BPCE, Paris FRANCE
15. Banco Santander SA, Boadilla del Monte SPAIN
16. Sumitomo Mitsui Banking Corporation, Tokyo JAPAN
17. Mizuho Corporate Bank Ltd, Tokyo JAPAN
18. Bank of America NA, Charlotte USA
19. Lloyds TSB Bank, London UK
20. Wells Fargo Bank NA, San Francisco USA
21. China Development Bank Corporation, Beijing. CHINA
22. Citibank NA, New York USA
23. HSBC Bank PLC, London UK
24. UniCredit SpA, ITALY
25. UBS AG, Zurich, SWITZERLAND
26. ING Bank NV, Amsterdam NETHERLANDS
27. Bank of Communication Co. Ltd., Shanghai CHINA
28. Credit Suisse AG, Zurich SWITZERLAND
29. Bank of Scotland plc, UK
30. Rabobank Nederland, Utrecht NETHERLANDS
31. Nordea Bank AB (publ), Stockholm SWEDEN
32. The Norinchukin Bank, Tokyo JAPAN
33. Intesa Sanpaolo SpA, Milan ITALY
34. Credit Agricole Corporate and Investment Bank, Paris FRANCE
35. The Hongkong and Shanghai Banking Corporation Limited, Hong Kong HONG KONG
36. The Toronto-Dominion Bank, Toronto CANADA
37. Royal Bank of Canada, Montreal CANADA
38. Banco Bilbao Vizcaya Argentaria SA, Madrid SPAIN
39. Postal Savings Bank of China Co Ltd, CHINA
40. Commerzbank AG, Frankfurt am Main GERMANY
41. National Australia Bank Ltd, Melbourne AUSTRALIA
42. The Bank of Nova Scotia, Toronto, CANADA
43. Natixis, Paris FRANCE
44. Commonwealth Bank of Australia, Sydney AUSTRALIA
45. Standard Chartered PLC, London UK
46. China Merchants Bank Co Ltd CHINA
47. Australian and New Zealand Banking Group Limited, AUSTRALIA
48. Westpac Banking Corporation, Sydney AUSTRALIA
49. Kreditanstait fur Weideraufbau (KfW), Frankfurt am Main GERMANY
50. Shanghai Pudong Development Bank Co. Ltd. CHINA