A new customer(Germany) want to do business with us,but they only can accept the L/C at sight.
In our normal procedure,we only can do the T/T with 30% deposite.

How we can choose?

Quoting from [JCai]:



A new customer(Germany) want to do business with us,but they only can accept the L/C at sight.


In our normal procedure,we only can do the T/T with 30% deposite.



How we can choose?

L/C can allow for an advance on order but usually only after a formal factory audit by third party inspection service to verify that you actually are the manufacturer.  If your not the manufacturer what is the need for 30% advance.  So to with L/C in hand why could you not get a loan from bank based on the fact that an accepted L/C is irrevocable unless stated in the L/C?  For a sample copy of an L/C check out this link:  http://www.export911.com/e911/export/docLC2.htm

L/C at sight is the easiest quickest and most secure for both parties.  There is no security in a T/T payment unless there is both a factory audit and a pre-shipment inspection.  This too is how you save on fly and buy expenses.

Ranger

Replying to [JCai]:Dear friend,of course you can accept irrevecable L/C at sight,but i recommend you adopting confirmed irrevecable L/C at sight cause he is your first customer.If the total value is not very big and you can bear,you can accept and just need the careful and professional L/C operator to inspect the L/C before production (and note that before the effective date).But if the total amount is too big,you can operate as the above suggested which asking the third party to do some certificate that you are the factory need deposit to arrange the material.Then negotiate with your customer to accept 30% in advance,and the balance is irrevecable L/C at sight.

Just my opinion,please don't mind if anything is unreasonable,thanks!!!

Replying to [JCai]:to me you have had a payment policy in place it has worked well so why change it ,, Banks are funny and at times inconsistant with L/C ,, I personaly do not like them , they are not fool proof .. it could cost you .. just be sure of your customer ..

Replying to [JCai]:
I know that producers are allways looking for min. 30 % advance payment.
But you should understand us, i mean that you should understand customers.
For example, my company allways have money on its account and can allways pay goods we want to buy in advance. But we can not always come to China or any other country to inspect yours firm. The reason why we can not came to inspect any company is that sometime our journey costs more than half of our profit from some delivery.
Then we are ready to open irrevocable L/C at sight for producer we want to cooperate. We often accept to pay expenses to our supplier for using LC.
L/C is one of the best and one of the most reliable way of international payments. It has only one weakness : it is very expensive.
However, you should accept L/C at sight, but only if it is confirmed irrevocable L/C at sight. You shoul also conclude a contract between you and the buyer where you should you state conditions for your cooperation with him.

Dejan.

Replying to [beginning of dream]: Sorry for not knowing things......but what is L/C at sight, Can anyone explain?

Letters of credit CAN be safe- but usually the buyer (applicant) and seller (beneficiary) has some risk depending upon how the L/C is set up. The Buyer initiates the L/C by using some of their credit line (or depositing cash) and basically requiring their bank to create a letter promising payment to a supplier provided that the supplier submits specific documents to the bank as required by the L/C. This typically includes a commercial invoice, air or ocean waybill etc. The bank acts as a "neutral" 3rd party providing evidence that the funds are available for payment and that payment will be made if the seller submits all required documents.

The problem with an L/C is that the seller can POSSIBLY send products that are not in conformance with what the buyer requests or what is designated in a purchase order. As long as the seller submits the documentation that is compliance with what is required by the L/C- the bank is required to pay against the L/C. Some buyers (applicants) offset their risk by requiring that one of the documents required in the L/C is a 3rd party inspection certificate or authorization. If the seller does not get the required document from the named 3rd party- they will not have all the documetns required to collect on the L/C. In this case, the seller inherits the risk. Many international freight forwarders have people on staff who are skilled in L/C negotiation- so you may want to ask your forwarder for some "hands on" help.

Replying to [JCai]:Dear Friend, I will not suggest you for LC, first time. First time go for TT and later on you can go for LC. Bcs using LC so many clause, which will be sometime, not understandable to you. After some transactions with TT, both parties can understood and then go for LC. Please read the following :

http://resources.alibaba.com/topic/32830/My_one_friend_Scammed_by_a_JORDIAN_Buyer_.htm

KILOIA

Quoting from [JCai]:


A new customer(Germany) want to do business with us,but they only can accept the L/C at sight.

In our normal procedure,we only can do the T/T with 30% deposite.


How we can choose?

L/C (Letter of Credit) is the most reliable and convenient way of payment in international business if the three parties involved are fairly honest. When talking about the risks one must look from the buyer's point of view as well as seller's point of view. If you are the seller and buyer is a first time buyer you must include your safeguards in your proforma Invoice.  If you are the buyer and buying from  a first time supplier you should include clauses in your L/C.These conditions must be agreed upon by both parties.

Confirmed irrevokable L/C has no risk and fair by both sides.

Your problem appears to be language barrier and the poor atitudes of banker.

Prem

 

Quoting from [JCai]:


A new customer(Germany) want to do business with us,but they only can accept the L/C at sight.

In our normal procedure,we only can do the T/T with 30% deposite.


How we can choose?

Let me confirm what [Ranger] has suggested. I'd also suggest that you opt for a sight LC (not an acceptance LC, i.e. 30-day, 60-day LC initially) rather than TT. (You may never get the balance 70%).

Make sure that the LC has been issued by a reputed, international bank, and that you CAN comply with all the terms in the LC. Get it scrutinised by your bank's international of foreign exchange division (just to be sure). LC is a better bet when you or your party are new.