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Documentary Credit Life Cycle

Documentary Credit Life cycle


Forwarding (Company) Agent & TRADEDOX

GLS CME EMIB GROUP


Siraj Mansuri Suraj Sathvara Hiren Maheshwari Binal Patel

Copyright 2006 | ITRADEV.NET

Documentary Credit Life Cycle


1
CONTRACT OF SALE |
If I pay, will you ship the goods?

the current way


If I ship goods, will you pay?

Importer

Exporter

Ok, Ill ask my bank to open a L/C

Great!

Documentary

Credits like a Letter of Credit or L/C is the most preferred form of payment for goods in international trade as it solves issues of mutual mistrust by using banks as arbiters.

Copyright 2006 | ITRADEV.NET

Documentary Credit Life Cycle


2
DISCUSS TERMS OF SALE | the usual way

Great!

Importers and Exporters figure out the terms of the LC through phone calls, faxes, emails and various other channels of communication. Also various departments from both sides may communicate with their counterparts during the process and further complicate matters.

Copyright 2006 | ITRADEV.NET

Documentary Credit Life Cycle

The longer it takes the more confusing it gets!


Copyright 2006 | ITRADEV.NET

Documentary Credit Life Cycle


3
IMPORTER APPLIES FOR LC | the usual way

Id like to open an L/C. Can you help me with the application?

You know that Banks do not deal in the merchandise that the LC covers. Banks only deal in documents

Yeah Yeah Payment will only be made if all terms and conditions are met and there are NO discrepancies!

Thats the Exporters headache not mine!

Traditional Documentary Credits are opened through Banks, creating a disconnection with the underlying order. This results in frequent Documentary Credit amendments that increase costs, discrepancies and turnaround time.

Copyright 2006 | ITRADEV.NET

Documentary Credit Life Cycle


4
LC ISSUED TO EXPORTER | the usual way

Exporter gets the goods ready for shipment and prepares the documents required by the LC

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Documentary Credit Life Cycle


5
DOCUMENTATION ISSUES |
oopS B/L notify party incorrect Goods description is not as per L/C

the usual way


Tenor is incorrect

Description not consistent

BIG oops

B/L not endorsed

Can I request for amendments and delay the shipment??

Insurance coverage not sufficient

Port is incorrect

Freight payment not as per LC statistics prove that 60% to 80% of the documents presented to banks do not comply with the L/C and contain errors thereby delaying payments or refusal by the negotiating bank altogether

THE L/C SAYS WHAT IT MEANS & MEANS WHAT IT SAYS


Copyright 2006 | ITRADEV.NET

DID YOU NOT COLLABORATE PROPERLY??

Documentary Credit Life Cycle


6
THE NEED FOR AMMENDMENTS| the usual way

Amendments? Delayed shipment! = Lost customers!

I wish there was a structured way to collaborate BEFORE involving banks

I wish I had made it my headache!

Copyright 2006 | ITRADEV.NET

Documentary Credit Life Cycle

There is a better way!

Forwarding company

&
Tradedox co.

Become mediator

Exporter

Importer

Copyright 2006 | ITRADEV.NET

Documentary Credit Life Cycle


1
CONTRACT OF SALE |
Ill open an LC Lets collaborate on the terms through TradeDoX Before I go to the bank

the mediator
Awesome!

Exporter Importer

Documentary Credits like a Letter of Credit or L/C is the most preferred form of payment for goods in international trade as it solves issues of mutual mistrust by using banks as arbiters.

Copyright 2006 | ITRADEV.NET

Documentary Credit Life Cycle


2
COLLABORATE |

the mediator

The Documentary Credit Collaboration module re-engineers the process of applying for a documentary credit. The Importer and vendor collaborate on the terms of the Documentary Credit, ensuring that the details are agreed before the Importer requests payment guarantees from its Bank

Copyright 2006 | ITRADEV.NET

Documentary Credit Life Cycle


2
COLLABORATE |

the mediator

In-line negotiation facilities that allow both parties to confirm, reject and request amendments to credit details before involving Bank partners
Copyright 2006 | ITRADEV.NET

Documentary Credit Life Cycle


2
COLLABORATE |

the mediator

Direct linkage to the underlying order to ensure consistency

Copyright 2006 | ITRADEV.NET

Documentary Credit Life Cycle


2 COLLABORATE |

the mediator way

TradeDoXs collaboration module creates a common ground

It incorporates bilateral viewpoints, to deliver a shared, common understanding of the terms of the LC
Copyright 2006 | ITRADEV.NET

Documentary Credit Life Cycle


3
IMPORTER APPLIES FOR LC
Heres the LC application already to go. And heres the electronic SWIFT code file that you can use to open the LC. All thanks to TradeDoX!

the mediator way


Wow! I wish all my other
clients were like this. I think Ill give all my clients a free copy of TradeDoX. Better then giving em t-shirts and pens!

Copyright 2006 | ITRADEV.NET

Documentary Credit Life Cycle


4
LC ISSUED TO EXPORTER |

the mediator way

Exporter ships goods and presents the documents to the bank.


Here are the docs exactly as per the LC. NO DISCRAPANCIES! All thanks to TradeDoX!

Wow! I wish all my other clients were like this. I think Ill give all my clients a free copy of TradeDoX. Better then giving em pens and t-shirts!

The Mediator makes the documents directly from the collaboration

Copyright 2006 | ITRADEV.NET

Documentary Credit Life Cycle

The mediator way

- Benefits for Exporters

Enables Exporters to get paid quickly by delivering trade finance documents that are conformant with the bank's terms Accelerates advice of LCs and amendments and virtually eliminates discrepancies. Reduces Errors - Minimizes costly data entry errors and discrepancies that can delay payments. (Single data entry for consistency in documents) Save Money - Avoids expense and alignment problems of preprinted forms, especially stocking many variations of export forms as documents can be printed together with your logo on any paper from any printer or you can print them on your existing letterheads. Easy-to-Use - Wizard based interface. Enter and edit complete, detailed information about individual shipments and LCs You can duplicate similar shipments and save them as templates to decrease data entry and store a master list of products and shipping entities to ensure quick and exact entry.

Copyright 2006 | ITRADEV.NET

Documentary Credit Life Cycle

the mediator way

- Benefits for Importers

Allows the Importer to collaborate in a structured way based on the exact Codes used by banks to open a LC.
Generates the LC application AND the SWIFT file that the bank can use to open the LC with the exact terms that the importer and exporter have agreed upon. Virtually eliminates the need for amendments and allows exporter to ship goods a lot faster. SWIFT OR Society for Worldwide Interbank Financial Telecommunication supplies secure messaging services and interface software to wholesale financial entities.

Copyright 2006 | ITRADEV.NET

Documentary Credit Life Cycle

The Mediator Way

- Benefits for Banks

Minimize personnel and staff cost that was needed to check clients documents for discrepancies and errors. Receive clear cut LC applications with all terms and conditions spelled out. Receive an electronic file that can be imported directly into the SWIFT application to generate the LC. Facilitate customers generate goodwill.

Copyright 2006 | ITRADEV.NET

Documentary Credit Life Cycle

Thanks you

www.export911.com
Copyright 2006 | ITRADEV.NET