Import Documentary Letter of Credit
An Import Documentary Letter of Credit (Import L/C) makes it easier for you do to business overseas by reducing risk for your suppliers.
You can establish a Letter of Credit in either Australian dollars or a major foreign currency. Settlement can be at sight or a term up to 180 days. This means you have the flexibility to negotiate payment terms and conditions according to your cash flow requirements.
- Can open up new opportunities to do business with suppliers who have never dealt with you before and provide them with confidence, and without the need to make a judgment on your credit-worthiness.
- You stipulate the payment terms and conditions that suits your needs.
- You specify the documentation that is to accompany each shipment, including any required to clear the goods through customs.
- You nominate the deadlines for shipment.
What about the Exchange Risk?
If your are trading in a foreign currency, fluctuations in the exchange rate mean you can be exposed to exchange risk between the date of your contract and the date your payment is effected.
If you have overseas receivables in the same currency, you may decide that these provide enough of a natural hedge. However, if you do wish to cover your risk, you may want to establish a Forward Exchange Contract (FEC) with Arab Bank Australia. This is a way to reduce your risk and potentially reduce your overall costs.
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