Loc, Lc , L/c

[Wilson1973]

Hi guys,

I'm looking at a project to import. Am a newbie and have gained some useful advice on shipping prices etc on these forums (thank you).

One thing I am looking at now is payment terms. Seems the few suppliers I am looking at are either 30/70 via TT or 100% LC.

I've heard that this costs money doing it through LC, although am not aware of associated costs.

Is there a rule of thumb for charges associated with a LC. Can I get one if I walk into my high street bank.

I'd rather not waste any banks time at the moment as this is a due diligence stage and nothing is certain.

Can any one shed light on costs / time frame associated with organising an LC, or recommend the best place / reliable source. Is this the best way forward ?

If it helps I'm looking at sourcing good shipped from Shanghai or ningbo to the UK. I'm looking at two suppliers and would need one for a 20ft container goods value 1.5K and one 20ft 3.5k (GBP). Then future 40ft containers circe 10k. Not sure what info is needed so posted this anyway.

Any help appreciated.

 

[adt67]

L/C's are OK and are a guaranteed method of payment for your supplier, but as we all know, the costs involved can be excessive.

There are usually opening charges, advising charges, negotiating charges, payment charges - sometimes the banks can really hammer you.

So, from personal experience, it may be better to agreee terms of, say, 30% deposit by T/T with order, and then 70% by T/T 7 days after shipment date BUT on your receipt of copy documents by fax or email from your supplier, ensuring that your supplier emails or faxes you a copy of the Bill of Lading to prove that the goods have actually been shipped.

 

[Wilson1973]

I actually quite like that TT arrangement.

Is that split and the way it is handled a common approach ?

Thanks

 

[adt67]

We've been dealing with a few suppliers in China and Vietnam for several years now in this manner.

They seem quite reluctant to give credit on "open account" terms so this seems to keep all parties happy.

Best not to get banks and L/C's involved - your costs will just escalate unnecessarily.

 

[Wilson1973]

Thanks ADT67... very useful reply...

Will pose these terms to the supplier (when they get back from their holiday).

 

[Delderek]

Hi guys,

I'm looking at a project to import. Am a newbie and have gained some useful advice on shipping prices etc on these forums (thank you).

One thing I am looking at now is payment terms. Seems the few suppliers I am looking at are either 30/70 via TT or 100% LC.

I've heard that this costs money doing it through LC, although am not aware of associated costs.

Is there a rule of thumb for charges associated with a LC. Can I get one if I walk into my high street bank.

I'd rather not waste any banks time at the moment as this is a due diligence stage and nothing is certain.

Can any one shed light on costs / time frame associated with organising an LC, or recommend the best place / reliable source. Is this the best way forward ?

If it helps I'm looking at sourcing good shipped from Shanghai or ningbo to the UK. I'm looking at two suppliers and would need one for a 20ft container goods value 1.5K and one 20ft 3.5k (GBP). Then future 40ft containers circe 10k. Not sure what info is needed so posted this anyway.

Any help appreciated.

LC's do not have to be expensive, and provided you as the "Opener" specify the charges correctly. You need to state "All charges UK and ****for the account of beneficiary", although for small values as above, it would probably be a little lengthy. There are many methods for the lower value shipments, (Even credit cards could be considered.) they could be CAD (Cash against Documents) SD (Sight Draft) etc.