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Consider This When Choosing A LC Provider

Having a good LC provider is of vital importance when you’re involved in domestic and international trade. They improve your credibility and minimize the risk of transactions. Your cash flow also becomes more fluid and this helps keep your company operating effectively. Because it is the LC provider (bank) that is responsible for the undertaking, they also need to be credible and truly capable of taking up that duty. So how do you choose one that fulfills these requirements? There are several banks and financial institutions that claim to offer Top trade finance products including LCs and other guarantees. It is up to you to do some research and, hopefully, make the best decision for you.

Reviews

This is the first and most basic step to take when looking for an LC provider. Ask around or look up forums online. If you have a particular bank in mind, you can start from there. What are people saying about their services? Are they secure and timely? Can you build a long-term business relationship with them? How effective are they? Note the pros and cons (if any) of working with them.

LC provider

Tailored Services

If you want the best results, your LC provider needs to be willing and able to understand at least the rudiments of your business. This way, they can offer the right solutions and advice to the specific situation you find yourself in. They should be able to modify or even customize your documents to suit your needs.

Collateral

Most LC providers will require you to submit collateral before releasing a letter of credit. The amount or type of collateral will depend on the amount of money you want guaranteed and also the risk involved in the business. It is important that you find out as much as you can about the collateral requirements of the LC provider. Are they fair? Can you afford to pay? If not, you can try looking for other LC providers that offer a more reasonable deal for you.

Reach and Limitations

This is an important thing to note especially when involved in international trade. To avoid political implications or certain geographical policies, you need to be sure that your LC provider facilitates global business activities. Know where the line has to be drawn with regard to their flexibility. If that doesn’t work for you, keep searching until you find the right one or the closest you can get.

Fees

Fees

Asides from the collateral, you may also be required to pay some other fees. These fees or charges are usually set aside to handle the LC authentication process, bank-to-bank reimbursement charges, and other ancillary fees. Can you afford it?

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