Skip to main content

How Do Import Letters Of Credit Work In Vietnam?

Have you just started your business? Well, there’s no secret that for a small business owner, it’s hardly possible to invest a huge capital for your company. That’s why you should take a glance at every small opportunity that you can use as a tool for your business growth.

Most business entrepreneurs look for an import letter of credit in Vietnam for their business growth when there’s any financial crisis. It can help your company out of any critical condition. Also, business investors and clients will take interest in your business as well.

Are you finding this post interesting? If yes, scroll down the page and keep on reading today’s post!

What Is A Letter of Credit?

Letters of credit are a kind of banking itself. The buyer’s banks assure the seller of remitting the amount on his bank using the letters of credit. The entire transaction depends on the contractual agreement between the seller and the buyer. This mechanism is also known as Documentary Credit as well.

Anyway, there are different types of letters of credit. But, most business owners apply for the import letters of credit in Vietnam. Why? Let’s find out here!

Benefits of Import Letters of Credit to The Buyers And Sellers

The buyers apply for letters of credit that specify the exporters mentioning the amount, maturity date, the goods, and payment terms as well. The exporter’s bank advises the exporter that a letter of credit is opened in his favor. Hence, he can get the benefits of the export letter of credit.

Then, the exporter sends the goods to the importer and submits all the required documents to the bank. Letters of credit are generally used in the conditions where the buyer or seller requires proof of standing.

How Do Importer Letters of Credit Work?

The buyer and seller make a sale contract with a PO/PI issued by the buyer for the supplier. Here, the applicant (buyer) arranges a letter of credit in favor of the beneficiary (seller) that covers the deal. Then, the seller ships the goods and presents all the documents required for LC within its validity as per the conditions. And, the LC opening bank pays the seller.

Apart from this, there are a few benefits that the buyer and seller enjoy:

  • The buyer can pay the seller after the goods are shipped.
  • The buyers need not face any financial risk if they don’t get the goods after placing an order.
  • The LC issuing bank can extend its credit so that the buyer can order products from the new vendors.
  • On the flip, the seller also remains stress-free a there’s no risk of canceling the shipment due to the irrevocability of the letters of credit (LC).
  • LC helps to increase finance to produce goods meeting the capital requirements.

Get the Web Address Here

RNR Trade Corporation Company Limited (RNR-TCCL) is a non-banking financial company (NBFC). If you need importer letters of credit in Vietnam, contact here. Click on rnrtradecorp.com for more details about the company.

Labels:

Comments

Post a Comment

Popular posts from this blog

Document against payment system: Definition, advantage & steps

Are you affiliated with the business? If you involved in import and export business, then this article is appropriate for you. Here you will, get a solid information of document against payment. Do you want to learn more about it? Then keep scroll down this page. Document against payment Document against payment is an international trade procedure. Here the exporter sends the sight draft to his bank and importer clears all payment through his/her clearing bank. It is an easy transaction process. People, who involved in export and import business, use this payment process. Now read the below points and know the advantage of using this payment process. Advantage of document against payment It is an updated payment method. Those who are involved in a large-scale business, they can buy goods in this payment method. Document against payment less pricey than letter of credit. The document against payment is a system under which a seller instructs the prese
Post a Comment
Read more

Non-performing letter of credit – What is the significance?

The nonbanking financial companies have been helping in financing various lines of business in an incomparable manner. And that is why in Thailand, a large number of business owners are developing an interest in dealing with the nonbanking financial companies. In the following passages, you can learn how these financing companies help with a non-performing letter of credit in Thailand. What is Non-performing Letter Of Credit? A guarantee of payment is issued by a bank for a client that is called ‘payment of last resort’ if the client fails to fulfill a contractual agreement with a third party. The non-performing letter of credit, also known as standby letters of credit is developed as a proof of good faith in business payments. These documents are also regarded as proof of a buyer’s credit quality and repay capabilities. The bank responsible in issuing the standby letter of credit aka non-performing letter of credit will perform a concise underwriting duty. This will assu
Post a Comment
Read more

Bank Guarantees In Thailand Can Cover The Liabilities Of A Borrower - Is It True?

It is true that business sometimes needs to GUARANTEE payments and a bank guarantee allows the customer, or debtor, to get goods, buy equipment or draw down a loan. Well, there are different kinds of bank guarantees, including direct and indirect guarantees. However, most people choose Direct Bank Guarantee in Thailand because the direct bank guarantee is a guarantee which is issued by the bank of the account holder directly in favour of the Beneficiary. Are you curious? Well, in today’s article, we will discuss the advantage of bank guarantees in Thailand with an example. Please, carry on reading the upcoming passage to learn more. Bank Guarantees in Thailand A bank guarantee is a lawful agreement, it covers the liabilities of a borrower in case of the debtor’s loss to fulfil proper commitments with another company. It is commonly given by the commercial banks to parties engaged in agreements with foreign or unknown parties, but this system will be valid for a definite peri
Post a Comment
Read more