Guaranteed Negotiation under LC’s
Despite the security of an LC, global exporters run the risk of being at the mercy of their buyers due to improper LC documentation ie. discrepancies in LC’s. Price Volatility of products/ commodities can result in importers/ LC applicant trying to find loopholes (discrepancies) in LC documents and negotiate discounts with exporters/ LC beneficiary.
The global rate for discrepant documents on first presentations is currently quoted to be in excess of 60%. Whilst the vast majority of these transactions are ultimately accepted and paid, there are still losses for companies in terms of additional man hours spent resolving the problems; costs in obtaining replacement or corrected documents to resolve the discrepancies; additional bank fees in respect of discrepancy charges and loss of interest due to delayed payment .Also, the value of adding confirmation to the LC is lost (despite paying fees) as confirmation is withdrawn by negotiating bank.
- A global reseller of networking products experienced significant payment delays under their export LC’s from buyers bank due to high no of discrepancies in documents. Our vastly experienced specialist team of LC document checkers did a detailed discrepancy analysis from previous presentations and made recommendations to client on lc drafting and vetting third party docs at draft stage. This resulted in significant interest costs savings to client as the payment period upon presentation of documents reduced from 30 days to less than one week.
- A global sugar trader selling to a high risk market in Africa for the first time entrusted us with preparing their export documentation under their LC’s. Our guaranteed negotiations service ensured there were zero discrepancies in documents resulting in the confirming & negotiating bank certifying docs as credit compliant and making payment within 48 hours of receipt of documents at their counters.