Re: Payment term: L/C at sight
Posted 06 Feb 2006 14:36
Replying to trado:
You are absolutely right trado. These are the intricate little details that banks need to go through. I was just telling selitzer the basic details of what "At Sight" means. Another point is that if either of the two Banks find ONE little discrepency in the documents (an i is not dotted or a t is not crossed), they can also reject the documents and ask for a new one to be issued. Banks are extremely careful when checking documents, to make sure they are 100% correctly issued according to the conditions of the L/C.
To answer PlaynTrade, it is sometimes very common for Sellers in China to ask for a 30% deposit, balance of 70% payable when goods are ready to be shipped. I have done this many many times. This allows the Seller to buy raw materials, and he also knows that the Buyer is genuine, and won't cancel the order once production has started, otherwise, if Buyer cancels order, Seller at least has 30% compensation.HOWEVER, one should ONLY trade this way, once a good relationship is in place between Buyer and Seller. At first, I would suggest a LC at sight. LCs are a bit costly, but faily safe. After the relationship has been secured, then Buyer could offer to send 30% by TT to Seller, and when goods are shipped, Seller faxes copy of Bill of Lading to Buyer, Buyer then TTs the balance 70% to Seller, and when Seller receives copy of TT, he can then send the Original documents to buyer. I do this all the time.TTs are far cheaper than LCs.