Evening
*Assume a new trading business (as middleman)is started, which means a new **** is opened and in this case with low capital.
*Also assume that buyers must first produce a L/C in the name of the middleman. So, buyer applies at his bank for transferable L/C in the name of the middleman. From here seller (middleman)transfers L/C to the manufacturer.
1. Will this transaction require financing or funds from the middleman. If so, which items?
2. Do banks in general assist the middleman (in this situation - new account, low balance) with granting the L/C (for transfer to manufacturer).
3. When is the L/C granted to the middleman: after the transferable L/C from the buyer reaches the middleman (his bank) OR before?
4. Roughly which percentage (formula) does the middleman's bank charge for (a) receiving the L/C and (b) passing it on?
Thank you for your input.
Sincerely,
J Reichert
Quoting from [Juane]:Evening
*Assume a new trading business (as middleman) is started, which means a new bank account is opened and in this case with low capital.
*Also assume that buyers must first produce a L/C in the name of the middleman. So, buyer applies at his bank for transferable L/C in the name of the middleman. From here seller (middleman) transfers L/C to the manufacturer.
1. Will this transaction require financing or funds from the middleman. If so, which items?
2. Do banks in general assist the middleman (in this situation - new account, low balance) with granting the L/C (for transfer to manufacturer).
3. When is the L/C granted to the middleman: after the transferable L/C from the buyer reaches the middleman (his bank) OR before?
4. Roughly which percentage (formula) does the middleman's bank charge for (a) receiving the L/C and (b) passing it on?
Thank you for your input.
Sincerely,
J Reichert
I've talked about this issue in great length in the Payment and Finance forum. However IM also leaving you with two websites so that you may better understand L/C transactions from Documentary Credit Specialists.
http://www.lcviews.com/back_to_back_lc.htm
http://www.creditmanagementworld.com/glossary/letterofcreditglossary.html
Also if you visit the the Payment and Finance forum we have two documentary credit specialist's there one being the member known asCatalystand the other Zealotwan. My answers are based on my personal experience with Letters of Credit as a sourcing agent and buyer.
Best regards,
Ranger
Me Tech Supply
ME Tech Supply a D. B. A provides sourcing solutions for both small and medium sized businesses. We are members of the GSAA whose Agents have verified more than 2. 5 million companies World WideWe offer low cos...
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Quoting from [Juane]:Evening
*Assume a new trading business (as middleman) is started, which means a new bank account is opened and in this case with low capital.
*Also assume that buyers must first produce a L/C in the name of the middleman. So, buyer applies at his bank for transferable L/C in the name of the middleman. From here seller (middleman) transfers L/C to the manufacturer.
1. Will this transaction require financing or funds from the middleman. If so, which items?
2. Do banks in general assist the middleman (in this situation - new account, low balance) with granting the L/C (for transfer to manufacturer).
3. When is the L/C granted to the middleman: after the transferable L/C from the buyer reaches the middleman (his bank) OR before?
4. Roughly which percentage (formula) does the middleman's bank charge for (a) receiving the L/C and (b) passing it on?
Thank you for your input.
Sincerely,
J Reichert