Proforma/Letter of Credit differences
Post 1 of 3
Hello all,
I posted this to the forum with Dr. Sebhatu, but wanted to get other opinions as well. Sorry for the length and any capital letters are quotes from the SWIFT (not me yelling).
Before I sent my customer the proforma he requested to be able to pay in 60 days after all documents listed in the L/C were received by his bank. I informed him that was unacceptable, that we could not in effect issue credit for 60 days and tie up our working capital.
On the Proforma I listed the following pertinent conditions:
1. Sight letter of credit in USD
2. Prices good for 60 days
3. Shipment: within 30 days afer receipt of letter of credit; please open letter of credit for 60 days total.
I have just received the advising L/C w/ SWIFT.
It states: BY DEF PAYMENT
/Deferred Pay Details
AT 60 DAYS AFTER SHIPMENT DATE
It also states in the instructions to Paying Bank:
At maturity date, please claim reimbursement from reimbursing bank...
Did I make a mistake on line 3 of my proforma when I asked to have him open the L/C for 60 days total? It would seem as though he thinks from that line that I am accepting payment terms at 60 days. I didn't think that saying "please open letter of credit for 60 days total" would change the terms from at sight to 60 days. Am I wrong? I just wanted to make certain that I left enough time to get everything done. I'm new to exporting and used an example proforma from a book. The book said nothing about opening the L/C for a certain amount of time had anything to do with payment terms.
Thanks in advance for any help or insight you can provide.
I posted this to the forum with Dr. Sebhatu, but wanted to get other opinions as well. Sorry for the length and any capital letters are quotes from the SWIFT (not me yelling).
Before I sent my customer the proforma he requested to be able to pay in 60 days after all documents listed in the L/C were received by his bank. I informed him that was unacceptable, that we could not in effect issue credit for 60 days and tie up our working capital.
On the Proforma I listed the following pertinent conditions:
1. Sight letter of credit in USD
2. Prices good for 60 days
3. Shipment: within 30 days afer receipt of letter of credit; please open letter of credit for 60 days total.
I have just received the advising L/C w/ SWIFT.
It states: BY DEF PAYMENT
/Deferred Pay Details
AT 60 DAYS AFTER SHIPMENT DATE
It also states in the instructions to Paying Bank:
At maturity date, please claim reimbursement from reimbursing bank...
Did I make a mistake on line 3 of my proforma when I asked to have him open the L/C for 60 days total? It would seem as though he thinks from that line that I am accepting payment terms at 60 days. I didn't think that saying "please open letter of credit for 60 days total" would change the terms from at sight to 60 days. Am I wrong? I just wanted to make certain that I left enough time to get everything done. I'm new to exporting and used an example proforma from a book. The book said nothing about opening the L/C for a certain amount of time had anything to do with payment terms.
Thanks in advance for any help or insight you can provide.
30 Mar 2006 22:07
Post 2 of 3
Replying to [tworiverstradingco]:
You did not make a mistake on line 3.
Anyone could understand what you meant is that the LC is at sight but the expiry date should be 60 days after the issuing date of the LC.
I think the buyer took advantage of you. I would suggest you contact him and tell him to put through an amendment with his bank to change the LC to "at sight"
You did not make a mistake on line 3.
Anyone could understand what you meant is that the LC is at sight but the expiry date should be 60 days after the issuing date of the LC.
I think the buyer took advantage of you. I would suggest you contact him and tell him to put through an amendment with his bank to change the LC to "at sight"
31 Mar 2006 04:01
Post 3 of 3
Replying to [grigo]:
Grigo,
This is the second time (really more than that) that you have helped me out. I agree with you on this. We have negotiated it down to 30 days with the understanding that future payments will be at sight. I don't want to do this, but I also don't want this deal to go south. He will be purchasing from me again (soon) and that deal will be worth the hassle that I am going through now.
As to the CE mark...I did find out that the designation on the box mark will be enough to get into the EU. My customer does not have any real need to have the Cert. Thanks for all your help Grigo. I really appreciate it.
If you don't mind, I'd like to know what you deal in. You can add me to your contacts...my trade manager name is tworiverstradingco. I'd love to hear from you.
Thanks again!
Grigo,
This is the second time (really more than that) that you have helped me out. I agree with you on this. We have negotiated it down to 30 days with the understanding that future payments will be at sight. I don't want to do this, but I also don't want this deal to go south. He will be purchasing from me again (soon) and that deal will be worth the hassle that I am going through now.
As to the CE mark...I did find out that the designation on the box mark will be enough to get into the EU. My customer does not have any real need to have the Cert. Thanks for all your help Grigo. I really appreciate it.
If you don't mind, I'd like to know what you deal in. You can add me to your contacts...my trade manager name is tworiverstradingco. I'd love to hear from you.
Thanks again!
31 Mar 2006 10:55
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