DORT FINANCE

INTERNATIONAL

FINANCIAL SERVICES

INTERNATIONAL

FINANCIAL SERVICES

CONSULTING

GROUP

financial Instruments

We offer financial instrument services to businesses to achieve the professional level

Standby Letter of Credit (SBLC)

BANK DRAFTS

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Performance Guarantees

Letter of Credit

PRE ADVICE MESSAGE

POF & RWA Messages

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Letter of Credit (LC)

A letter of credit is a financial document issued by a bank on behalf of a buyer (the applicant) to guarantee payment to a seller (the beneficiary) upon the fulfillment of certain conditions. In essence, it serves as a promise that a specified amount of money will be paid to the seller, provided they meet the terms and conditions outlined in the LC.

Types Of Letters Of Credit

Commercial letter of credit: This is the standard LC used in trade, ensuring that the seller receives payment upon fulfilling the terms and conditions of the LC.

Usance letter of credit: This type of LC allows deferred payment, meaning the buyer can pay at a later date, as specified in the LC. Back-to-Back letter of credit: Ideal for middlemen or brokers, this LC involves two separate LCs issued in favor of different beneficiaries, one based on the other.

Standby letter of credit: Often used as a backup to ensure payment in case the buyer fails to meet their obligations, the Standby LC provides an additional layer of security for both parties. Irrevocable letter of credit: This type of LC cannot be altered or canceled without the consent of all parties involved, providing stability and security for the seller.

Revocable letter of credit: Unlike the irrevocable LC, this type can be altered or canceled without the seller’s consent, which makes it less secure and less commonly used.

Revolving letter of credit: Designed for ongoing or repeated transactions, a revolving LC automatically reinstates the credit amount as it is used, streamlining continuous trade relationships.

Confirmed letter of credit: In addition to the issuing bank’s guarantee, a confirmed LC is also confirmed by another bank, often the beneficiary’s bank. This provides an extra layer of assurance.

Red Clause letter of credit: This LC allows for partial payment to the beneficiary even before shipment, providing financial assistance to the seller during the production phase.

Sight letter of credit: In a Sight LC, payment is made to the seller as soon as compliant documents are presented. It ensures a quick and straightforward transaction process.

The benefits of using a letter of credit

Risk mitigation: LCs significantly reduce the risk for both the buyer and the seller. The buyer is assured that the seller will only receive payment upon meeting the specified conditions, while the seller is guaranteed payment once the conditions are met.

International trade facilitation: LCs are widely accepted in international trade, making it easier for businesses, even startups to engage in cross-border transactions with confidence.

Flexibility: LC terms can be customized to suit the needs of the parties involved without collateral, allowing for flexibility in trade agreements.

Credibility: A confirmed LC issued by a reputable bank enhances the credibility of the buyer and seller in the eyes of each other, making it easier to attract partners and negotiate favorable terms.

Our Letter Of Credit Process

1. Consultation and application: Your journey begins by consulting with our expert team at PAFCO. We’ll assess your specific trade requirements and our trade finance advisory guide you through the LC application process.

2. LC issuance: Once your application is approved, we initiate the LC issuance process. We work closely with our partner banks to ensure your LC is issued without delays.

3. Terms and conditions: We help you customize the terms and conditions of the LC to meet the unique needs of your trade agreement. Whether it’s an import LC without collateral or documentary LC issuance, we’ve got you covered.

4. Shipment and documentation: As your goods are shipped, it’s crucial to ensure that all required documents are prepared in strict compliance with the LC terms. Our team provides guidance to guarantee smooth documentation.

5. Document examination: The beneficiary (seller) submits the documents to their bank, which thoroughly examines them for compliance with the LC requirements.

6. Payment and settlement: If all documents are in order, the beneficiary’s bank forwards them to your bank, and the payment is made, ensuring a secure and timely settlement.

7. LC closure: Once the payment is executed, the LC is considered closed, and any remaining funds are returned to you.

standby Letter of Credit (sbLC)

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A standby letter of credit (SBLC) is a document from a bank or financial institution or direct standby letter of credit providers that guarantees payment for a client. It is often used as a guarantee of payment and can serve as a backup in case the client is unable to fulfill their financial obligations.

With years of experience in the industry, at Pacific Corp we are experts in providing direct & reliable SBLC services for businesses of all industries and all sizes.

Similar to a traditional letter of credit, an SBLC ensures that the beneficiary will receive the agreed-upon amount of money if certain conditions are met. This can provide reassurance to both parties involved in a transaction and mitigate the risk of non-payment. SBLC Direct Service Providers are commonly utilized in international trade, construction projects, and other business.

Types of Standby letter of credit:

Financial SBLC:

This type of SBLC is often used to guarantee financial obligations, such as loans, payments, or financial transactions.

Performance SBLC:

Performance SBLCs serve as a guarantee that a supplier or contractor will meet the terms of a contract, ensuring timely completion of a project or delivery of goods/services.

Note: A Standby Letter of Credit (SBLC) is termed “standby” because it primarily serves as a backup or secondary payment guarantee, standing by to be activated only when certain conditions or obligations are not met. It is not meant to be the primary method of payment but acts as a safety net in case the primary payment method fails.

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PRE ADVICE MESSAGE

A pre-advice message is a message sent between two banks that are involved in a transaction to ensure

the safety of the wire transfers when large sums of money are involved. It is issued by one bank to

another bank notifying the issuance of documentary credit and advising receiving bank to sends their

acknowledgement. The main objective of the message is to reconfirm all the details provided by the

recipient is correct before the wire transfer and get assured that the beneficiary has a way to withdraw

money from the bank. The advising bank will also notify the beneficiary without opening advice of credit

thus enabling the seller to reconfirm to process the buyer’s order.

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BANK DRAFT

A bank draft is a payment instrument that guarantees the funds by your financial institution. It also is

known as a banker’s cheque. In simple terms obtaining a bank draft is similar to asking your bank to

write a cheque for you. The draft will enable you to make payments without having to withdraw money

from your account. Here the bank will transfer the amount to an account of the bank issuing you the

bank draft which the receiver of the money can use to collect money with. With this, the receiver won’t

experience check bounces due to lack of funds in the account.

Bank guarantee is a guarantee issued by a bank or a financial institute to reduce risks in transactions for

both parties involved in the transactions in case of a contract breach.

In an event of a contractual obligation of the seller/ exporter or a payment obligation to the seller/

importer, the bank or the financial institute guarantees to indemnifies the recipient against the

contractual obligations of the exporter or the importer. With this, the risk factor will be reduced

drastically for both parties in a contractual agreement while encouraging the transaction to proceed

effectively

POF

RWA

POF Messages

Proof of funds is a document or bank statement that showcases the financial capability of a person/company to undertake the transaction. With this, the other party or the parties will easily be able to get ensured of financial capability required for the transaction is procurable and legitimate. POF is mostly used when large sums of money is involved in transactions like biddings and investments.

RWA Messages

Also known as a bank comfort letter, RWA is a document issued by a bank or a financial institution on the clients’ behalf showcasing the capability and willingness of him or her to enter into the financial transaction.

POF & RWA messages with OUR US?

Get your POF and RWA via a leading trade financial service provider in the UK like us who owns a reputation for integrity and trustworthiness. Get in touch with us today with your inquiry and our team will get back to you soon.

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Performance guarantee

Performance guarantee is an assurance issued by a financial institute for meeting all the performance terms and conditions of the contract by the contractor. With this, the client gets better security to guarantee job completion. If the contractor fails to perform all their obligations under the contract, compensation is guaranteed for the client for their monetary losses.

Performance guarantees are mostly used in the construction industry between contractors and clients and it’s a mandatory financial instrument for government projects.

Performance guarantee with OUR US?

Obtain your performance guarantee for your next contract fast without having to go through the complex documentation processes. With years of experience in providing performance guarantees for contracts of all sorts and projects of all sizes, we have the experience and the expertise to offer you a service that you can rely on.