Hi all,

 

You know that L/C is most confident way to payment, but here is a question to me:

 

Is there any risk involved in L/C payment?

In case of opening L/C,is it possible to sell a product to a buyer without receiving any money?

 

Let us know your idea.

The risk with L/C is that the bank pays against submitting certain documents instead of actually checking the goods. So even if you pay by L/C you can be scammed by delivering bad quality or fake goods. For example you may find that instead of some expensive machinery only bricks were loaded - since the bank only checks the Commercial Invoice, Bill of Lading and Packing List.


Therefore the best is if you combine the L/C with an on-site production and loading supervision either by you personally or a third-party agent on your behalf.


c[ ]

Thank you for your good explanation.

You explained  the case for a buyer but I asked about seller.

Suppose we are a seller and want to sell a product and our customer opens L/C for us.

Ok, here is my question: After opening L/C ,can we deliver the product without any anxiety about the money ?is it probable that we don't get product's cost?

 

Generally.once improter open L/C,as long as your document are match up to L/C,you can get the money.

This is a typical question when one is into international trade and the concerns are even greater if you are dealing thru internet.

The seller and buyer both are risk in such situation. Both of fear of loosing their money/ goods/ quality issues/ timely delivery etc.

But The business deal can only take plce if both the parties concerned have some level of optimism and trust.

You have to follow your instincts, be very observative and use your experience in choosing your business partner, mode of payments etc.

LC is safer option, where both the parties set to agree forth written terms of trade, delivery and payment.

Each follow their set of conditions and the deal is completed thru the bank. But one must be carefull in interpreting the LC and following it carefully.

For the buyer, they can always have a agent, inspection company etc. to have their goods checked for the quality etc. at the factory itself, before shipment. This will protect interest of both the parties.

If you are familiar with the buyer and that you know that your products can be sold in buyers country easily, then you can accept to get some advance and balance by D/P thru the bank, where the seller wil have full control of the goods untill the buyer pays the bank and get the shipping document from the bank to claim his ownership. It is rather economical way, since the transaction costs are minimal.

Again the buyer must have inspection done at the factory itself before shipment.

If the product is a niche product, typically made for the buyer on their order, you must go for 100% advance before shipment, may be in parts as per your understanding with the buyer.

Tarun wrote:

This is a typical question when one is into international trade and the concerns are even greater if you are dealing thru internet.

The seller and buyer both are risk in such situation. Both of fear of loosing their money/ goods/ quality issues/ timely delivery etc.

But The business deal can only take plce if both the parties concerned have some level of optimism and trust.

You have to follow your instincts, be very observative and use your experience in choosing your business partner, mode of payments etc.

LC is safer option, where both the parties set to agree forth written terms of trade, delivery and payment.

Each follow their set of conditions and the deal is completed thru the bank. But one must be carefull in interpreting the LC and following it carefully.


For the buyer, they can always have a agent, inspection company etc. to have their goods checked for the quality etc. at the factory itself, before shipment. This will protect interest of both the parties.

If you are familiar with the buyer and that you know that your products can be sold in buyers country easily, then you can accept to get some advance and balance by D/P thru the bank, where the seller wil have full control of the goods untill the buyer pays the bank and get the shipping document from the bank to claim his ownership. It is rather economical way, since the transaction costs are minimal.


Again the buyer must have inspection done at the factory itself before shipment.

If the product is a niche product, typically made for the buyer on their order, you must go for 100% advance before shipment, may be in parts as per your understanding with the buyer.

I benefit a lot from your artilcal

thnax very informative

Comparatively, L/C is much safer for importer and exporter. If adpot T/T, the buyer is at the risk of being cheated and if adopt collect as D/P or D/A, then the seller is much worried about the payment.

But L/C is not 100% safe, as a seller, you need to verify the L/C to see whether it is real or fake, and also check the credit of the bank as well as the customer. It is much complicated but much safer than T/T and D/P.

Hi All, My personal belief is that there is no substitute for L/C.How can you trust a company to deliver the goods after it has been paid in full by T/T?????????? Furthermore, Chinese companies do not accept L/C's I wonder why,what have they got to lose apart from a potential customers.

Yes its true L/C is safe payment way for exporter and importer both of party, in the other hand this safe payment way most of time supplier take the advantage and give buyer either low quality goods some times fake goods, This is most common for China supplier, when they get the L/C payment they forget about their commitment of product quality, I loose my money several times to a chinese supplier, now think if business with chinese supplier I must be stay in China and every time check my product before shipment, its very expensive for a buyer, not only that this time China Visa also very complex, this is one kind of Chinese Govt. policy to make fraud with foreign buyers.

Hello,everybody

 I want to know if one seller is going to be paid byT/T what 's the procedures it involved ,can anybody tell me the details thank you