Importing Services

Services that help you mitigate risk and improve your cash flow when buying goods or services internationally.

Import Letters of Credit

As an importer, you may have concerns about conducting business and negotiating payment terms with unfamiliar foreign suppliers.

Chetna Capital can assist your business manage these concerns by finding a lender that can help you limit your financial risk and helping to improve your cash flow.

Structuring an import letter of credit (also called an L/C or documentary credit) is an excellent way to ensure your company does not pay for goods until the supplier provides evidence that the goods have been shipped.

An import letter of credit is a document issued by a major bank on behalf of an importer, or buyer. The import letter of credit guarantees an exporter payment for goods or services, provided the terms of the letter of credit have been met.

By using an import letter of credit for your international purchases, you can:

	conserve your company's cash flow by eliminating the need to make advance payments or deposits
	strengthen relationships by demonstrating your company's creditworthiness to suppliers
	support your suppliers' access to bank credit, since in many countries, letters of credit are pledged by exporters as security against working capital loans

Exporting Services

Services that help ensure your company is paid for goods or services sold to foreign buyers.

As an exporter, it is important to consider the credit risk of your foreign buyer. But it's not always possible to receive cash in advance for your goods.

As an exporter, you need to consider the credit risk of your foreign buyer. Business practices and conditions in foreign markets are beyond your control and it's not always practical, or possible, to request advance payments for your goods or services.

An export letter of credit is a document issued by a major bank on behalf of the importer, or buyer. The letter of credit constitutes a promise to pay the seller, or exporter, upon receipt of goods or services, provided the terms of the letter of credit have been met.

By insisting that a letter of credit is issued for your transaction, you can:

	ensure that you are paid - even if the buyer fails to pay, the bank that issued the export letter of credit is obliged to pay for your goods or services if your documents comply to the letter of credit
	enhance your cash flow - even if the payment terms allow the buyer 30 days to pay, the issuing bank may pay you immediately, less a small discount fee
	provide greater security of payment if confirmed by a secondary bank - this means that even if the buyer and the issuing bank refuse to pay, the confirming bank may pay your company if your documents comply to the letter of credit

Loan Collateralization

For loans obtained through international banking, bank guarantees and letters of credit are at times, still requested as the basis for meeting lender’s loan requirements.

There are several major varieties of letters of credit, each serving a different purpose. An IRREVOCABLE LETTER OF CREDIT cannot be canceled before a specific date without agreement by all parties involved, whereas a revocable letter of credit can be amended at any time by the issuing bank.

Bank guarantees are normally instruments that have been fully backed by some form of collateral stocks, bonds, property or hard cash/assets. Bank guarantees have an average life of 5 years, which can be renewable if agreed prior to its issuance. These instruments can also be paid annually or semiannually as specified prior to issuance.

For further information on these products, please contact us with your inquiry or fill out our intake form. A Chetna professional will contact you to discuss your business and financing needs further.