Friday, 22 May 2015

Secure your Business Transaction with LC Discounting

Letters of credit is the payment technique, which has a balanced risk arrangement for both parties. Letter of Credit Discounting, in a broad viewpoint, is one of the payment techniques in international deal. It is a document from a bank guaranteeing that a vendor will receive compensation in full as long as certain deliverance conditions have been met. The name "LC Discounting" obtains from the French word "accreditation", a power to do something, which derive from the Latin "accreditivus", and meaning faith.

LC Discounting
LC Discounting
Involvement of Banks in LC Discounting
There are a variety of types of LC Discounting like Revocable, Irrevocable, definite, unofficial, Clean & Documentary, Fixed, rotating, transferable, and Back to Back etc. Most ordinary and safe LC is Irrevocable LC Discounting for both purchaser and seller.

LC Discounting Services is a declaration given by the buyer’s bank to forward the amount to the seller through seller’s depository on maturity, as per the terms and setting of document based on the contractual conformity between buyer and seller. Now in simple words, If LC Confirmation opened on your name as recipient, you will receive sum though the bargain hunter bank (opening bank) on the approved time. All LC for export import deal is handled beneath the strategy of Uniform Customs and Practice of Documentary Credit of International Chamber of Commerce (UCP 600).  I know, the above explanation about LC is not perfect. So I appeal you to read all articles about LC Discounting in this blog.  

The bank that note down the Letter of Credit Discounting will act on behalf of the purchaser and make certain that all rescue conditions have been meet before assembly the payment to the supplier. Most LC are governed by rules propagate by the International Chamber of Commerce identified as Uniform Customs and Practice for Documentary Credits. It is typically used by importing and exporting companies predominantly for huge purchases and will often counteract the need by the consumer to pay a deposit before deliverance is made.

To get more Information related to LC Discounting Visit our related BLOGs or Website at NumeroUno Business Consultancy.


Friday, 15 May 2015

Well Define of the Letter of Credit by Numerouno Consultants

What is LC Discounting?

A second guarantee, additionally to a letter of credit, that commits to expense of the Letter of Credit. A confirmed letter of credit is usually used once the supply bank of the letter of credit could have questionable trustiness and therefore the marketer seeks to get a second guarantee to assure payment.

Letter of Credit
Letter of Credit

Other Defined LC Discounting as

A letter of credit may be a document issued by a bank that permits the holder of the letter to draw the funds as declared on the letter from the supply bank. In distinction to a confirmed letter of credit, if the vendor doesn't obtain the second guarantee, the document would be referred to as an unofficial Letter of Credit.

How to do LC Discounting and how it works?

When negotiating the terms of sale, the vendor would need a letter of credit requesting the advising bank to feature its confirmation. The client includes this request once submitting the applying for Letter of Credit to his bank. In most instances the issued credit states:  "Please advise beneficiary adding your confirmation" or words to similar result. Note:  his may be a request, not a demand.

The advising bank for varied reasons could decline to feature its confirmation and easily advise the Letter of Credit while not engagement on its half. Once adding confirmation, typical language enclosed within the letter would be, "We herewith ensure this credit and thereby underneath take that every one drafts drawn under, and in tract compliance with the terms declared in that are going to be punctually honored on presentation and delivery of documents as such as, if bestowed, at this workplace on or before the termination date."

Referred to as a B/L and BOL, a bill of landing may be a transport document to be bestowed by the shipper or businessperson. It is issued by a carrier and involves the utilization of various modes of transport - ocean, air, road, and rail. Transport documents also are the forwarder merchandise receipt, aside from mate receipt, and railway receipt.

It should to be noted that letter of credit transactions involve sure risks, with legal risks, restrictive and sovereign risks, and fraud risks. Risks to the individual embody late or early cargo, quality, non-delivery of products, and Letter of Credit. Merchandise could also be broken in transit or short-shipped. It’s vital that sellers review the necessities and gift all documents on time.

Official documents conjointly embody origin certificates, embassy group action, licensees, and scrutiny certificates. Finally, insurance documents which will be bestowed embody certificates and insurance policies. There are totally different international payment strategies, together with direct payment, documentary assortment, documentary credit, and advance payment. Direct payment may be a payment technique that's secure for the client whereas documentary assortment is secure for the client and marketer. Documentary credit and advance payment are safer for the vendor.

Wednesday, 13 May 2015

Tips and Insight of the Investment of LC Discounting

LC Discounting is a novel form of item. These letters facilitate to make sure that international shipping transactions blast off while not a hitch, however generally individuals have to be compelled to take the time to work out precisely what they're addressing before they become involved. So as to assist you get the foremost from investment in LC Discounting, here are some necessary things that you just should to confine mind.
LC Discounting
LC Discounting
  • If a LC Discounting goes to be effective, one thing needs to get it wrong within the international transactions that are happening. Otherwise, the letter merely acts as a guarantee to safeguard everybody concerned within the trade.
  • When you're investment in LC Discounting, you'll be able to establish them from anyplace within the world. These letters are ideal for international shipping and that they are often created domestically or abroad betting on the case and also the wants of the exporter and importer.
  • Funding for LC are often organized in any quantity, however they're additionally subject to the offered credit line from the provision bank, in order that are a few things to suppose.
  • LC funding needs a negotiation on the part of everybody concerned the terms of the agreement are getting to vary for each single arrangement and every one parties should to agree on those terms so as to achieve success.
  • Three documents are needed for investment in LC Discounting in international transactions. The documentation that proves non-payment is needed and also the vendor needs to sign this document. The invoice showing the group action details is additionally needed. Finally, a replica of documentation that proves that the cargo really passed is required.
  • Investing in LC Discounting isn't one thing that everybody can like. You've got to find out concerning this sort of investment and verify whether or not it’s right for your wants supported the case that you just are in.
There are such a large amount of various things to suppose once it involves investments; however these parts of Letter of Credit can provide you with the chance to create a far higher call concerning your investment. Monetizing investment instruments may be a good way to induce funding for varied things, together with within the case of LC Discounting funding. Make sure that you just take the time to find out everything that you just will concerning LC and discover whether or not it's the simplest investment for you before you become involved.

Friday, 1 May 2015

Complexities of Securing a Back-to-Back LC Discounting

Many lenders have experienced this familiar scenario: An organization, usually an intermediary, claims to have arrived a big export contract. Likely undercapitalized, they do not have the finances to purchase the item so they can sell it at an attractive profit. They do have, or claim they can get, a LC Discounting score in the payment of the final sale once they ship the goods.

LC Discounting
LC Discounting

Approaches of LC Discounting

The intermediary approaches a financial institution thinking that the lender would not turn down the financing for a deal this profitable. First, the organization demands an advance, or a loan, since they have a LC Discounting score as a source of repayment. The organization soon understands, however, that financial institutions in the United States do not create loans against characters of credit score because of performance risk.

What if the intermediary fails to execute precisely according to the terms of a correspondence of credit? In that case they might not get paid and, consequently, they may not be able to repay the loan. Not easily discouraged, however, the exporter comes up with the next best idea. Since the intermediary has a letter of credit score in hand, he demands the lender to problem a second LC Discounting score to the provider of the item. The first correspondence of credit score would represent the security for the second correspondence of credit score. 

This arrangement is often known as a back-to-back correspondence of credit score, which is also sometimes known as main and additional characters of credit score, a mother and baby correspondence of credit score, or a master and additional correspondence of credit score. Since a U.S. financial institution will not agree to create a loan against a correspondence of credit score, it will also refuse to problem a back-to-back LC Discounting score. Again, what if the lender has to pay for the additional correspondence of credit score, but cannot collect on the main correspondence of credit? Over the years, too many war stories have scared off most lenders.


Very few, if any, U.S. institutions will amuse the notion of providing back-to-back LC Discounting score. This practice may vary in different nations and is, in fact, quite routine in some Parts of Asia. Any financial institution in the U.S. that would problem a back-to-back correspondence of credit score would only consider doing so for well-established customers who have proven their ability and expertise to execute correctly. Banks do, however, usually offer a couple of alternatives: an assignment of continues or a transferable correspondence of credit score. I’ll discuss these options in future articles.

Monday, 27 April 2015

Make your Business Rules with LC Discounting

Rules and Regulations are important for Business weather it is a small business or a large enterprise without rules and regulation it is difficult to run your business smoothly and in efficient manner .But making a rules for a business is another important task that need to be focused carefully and with expertise knowledge especially for business transactions. Here we describe one of the processes with whom you can maintain your financial records and transactions with a third party as a guarantee.

LC Discounting
LC Discounting

Security involved in LC Discounting

A LC Discounting is a financial appliance used to secure Business Transaction to a particular party on production of specific documents that proof the shipment of goods. LC Discounting are typically required by in a foreign country suppliers in a challenge to mitigate some of the risks connected with trading on open account terms.

The riskier the transaction, the harder and extra costly it will be to finance. So we need to develop a specified rule for that and LC Discounting is the best of best method to secure our Business Transactions. The political and economic immovability of the buyer's country can also be a question. To endow with financing for either financial statement receivable or the production or purchase of the manufactured goods for sale, the lender may require the most secure methods of payment, a LC Discounting (possibly confirmed), or export credit insurance or guarantee.

Rules related to LC Discounting:-

  • The very first rule is that both the parties i.e. importer and exporters have an account on a commercial Bank.
  • Both need to check the complete Bank transaction statement of opposite parties i.e. exporter need to check the bank transaction of importer party and importer needs to check the Bank transaction of exporter parties.
  • Check the capacity of both the parties i.e. both have the capability to fulfill the necessary requirements.
  • Check both have a full documents needs to develop a LC Discounting.
  • Put Bank Transaction as a proof of your financial and billing records. 

Normally this work is done by Commercial Banks or other banks but you also need to focus on all this things for your business and financial safety. Bank will do all this work in a specified process and put your transaction as Bank Guarantee. To Know More about rules related to LC Discounting please visit our BLOGs and contact us at NumeroUno Business Consultancy.

More Information

Tuesday, 21 April 2015

Zoom it Your Financial Report with LC Discounting

A LC Discounting is a Legal document made by both creditor and a debater for securing his financial transaction by handling out to a third party like Banks or other Financial Institutes. These types of documents are bi-directional i.e. made by taking the terms and conditions of both the parties under third party view.


The parties involved in a LC Discounting transaction are as follows:


1. The buyer i.e. consumer. He or she develops the LC Discounting.

2. The opening bank. This bank generally issues the LC Discounting, so it is from time to time referred to as the “issuing bank.” It assumes liability for the payment on behalf of the purchaser.

3. The paying bank. This is the bank underneath which the drafts or bills of substitute are drawn under the credit. A paying bank in an L/C business might also act as the negotiating bank, advising bank or confirming bank, depending upon what errands it accepts.

4. The retailer. That’s you, the exporter, in this case–the recipient to whom the credit is issued to.

Process of LC Discounting

Once Creditor and debaters agree on payment by making a document like LC Discounting, it is the customer’s accountability to take your pro forma statement to her bank and open the L/C in your kindness. Once the aperture bank has all the correct information from the customer, it advises you, the seller, that the L/C has been opened. Oftentimes this will be done by chain to the paying bank. The LC Discounting is ending and subject to correction only for errors in conduction. That’s why precision in all details of your LC Discounting is perilously important.

Thus LC Discounting are helpful tools which propose to help you to advance your credit score by removing the unconstructive items from your credit reports. These correspondences are usually sent to the creditors and the gathering agencies as an appliance to protect you from deception and at the same time to reviewer the credibility of the creditor with reverence to its right to get coupled with your credit report. These LC Discounting must always be sent by qualified mail for future documentation.

Wednesday, 15 April 2015

Well Define of the LC Discounting (Letter of Credit Discounting)

What is LC Discounting?

A second guarantee, additionally to a letter of credit, that commits to expense of the LC Discounting. A confirmed letter of credit is usually used once the supply bank of the letter of credit could have questionable trustiness and therefore the marketer seeks to get a second guarantee to assure payment.

Other Defined LC Discounting as

A letter of credit may be a document issued by a bank that permits the holder of the letter to draw the funds as declared on the letter from the supply bank. In distinction to a confirmed letter of credit, if the vendor doesn't obtain the second guarantee, the document would be referred to as an unofficial LC Discounting.

LC Discounting
LC Discounting

How to do LC Discounting and how it works?

When negotiating the terms of sale, the vendor would need a letter of credit requesting the advising bank to feature its confirmation. The client includes this request once submitting the applying for LC Discounting to his bank. In most instances the issued credit states:  "Please advise beneficiary adding your confirmation" or words to similar result. Note:  his may be a request, not a demand.

The advising bank for varied reasons could decline to feature its confirmation and easily advise the LC Discounting while not engagement on its half. Once adding confirmation, typical language enclosed within the letter would be, "We herewith ensure this credit and thereby underneath take that every one drafts drawn under, and in tract compliance with the terms declared in that are going to be punctually honored on presentation and delivery of documents as such as, if bestowed, at this workplace on or before the termination date."

Referred to as a B/L and BOL, a bill of landing may be a transport document to be bestowed by the shipper or businessperson. It is issued by a carrier and involves the utilization of various modes of transport - ocean, air, road, and rail. Transport documents also are the forwarder merchandise receipt, aside from mate receipt, and railway receipt.

It should to be noted that letter of credit transactions involve sure risks, with legal risks, restrictive and sovereign risks, and fraud risks. Risks to the individual embody late or early cargo, quality, non-delivery of products, and LC Discounting. Merchandise could also be broken in transit or short-shipped. It’s vital that sellers review the necessities and gift all documents on time.


Official documents conjointly embody origin certificates, embassy group action, licensees, and scrutiny certificates. Finally, insurance documents which will be bestowed embody certificates and insurance policies. There are totally different international payment strategies, together with direct payment, documentary assortment, documentary credit, and advance payment. Direct payment may be a payment technique that's secure for the client whereas documentary assortment is secure for the client and marketer. Documentary credit and advance payment are safer for the vendor.