Question:
I hear buyers and suppliers talk about 15 and 30 day LC payments.
Are there other variations of this payment method and how long does it take for the buyer to open a LC?
If the buyer opened a LC , why does the supplier need to have an irrevocable LC? Is that because buyers may have opened a LC for a larger amount than the particular order of a certain supplier?
In case of a LC I suppose it is important for us to know if it is a 15 or 30 day LC, so that we know when we get paid…right?
A broker stays the middleman, while consultants usually take a step back when a buyer is introducd to the supplier. They consult and offer guidance if needed. If that is not needed, how do we stay in the LC loop?
Answer:
15/30 days LC means that the buyer will release his money 15/30 days after shipment. You’ll get paid after the supplier receives that money.
Not many suppliers agree to this on the first shipment.
LC at sight is the normal LC which is paid after the ship is loaded and documents are given to the bank by the supplier. They check it and release the buyer’s LC payment.
Check the payment video in module 5 for a review.
There are two types of LC. Revokable and Irrevovable.
Revokable will allow the buyer to stop proceedings mid way and claw back the LC thus not making payment.
With irrevocable, he cant stop it after he has opened it. That is better for the supplier.
You will stay in the LC by simply continuing to ask the supplier.
Stepping back does not mean that you cant check and push from time to time. It just means that you are mostly hands-off and more professional than a broker.
Amin