Category: Trade Finance

LETTER TO FRIENDS, CLIENTS AND COUNTERPARTIES

Dear Friends, Clients and Counterparties,

MINIMIZE THE UNKNOWNS TO MAXIMISE PROFIT IN 2018

The Unknowns inherent to our professional lives are staggering; naturally they can cause a lot of stress. Scenario planning is a logical stress mitigation tool-identifying the “worst case scenario” and strategizing a rebound can add great peace of mind. But as the global economy continues to shift and shake , we’re constantly reminded that we can’t have a plan for every possible outcome. And this reality is what stress me the most. And not the temporary “good stress” – as when you’re watching a sport or giving a presentation, or proposing to your girlfriend – I’m talking about chronic stress.

The kind that will kill you faster than lack of sleep, smoking, a sedentary lifestyle and alcohol abuse combined.

Everyone reading this can relate, because as business people it’s our job to be prepared for the unexpected, to have answers when the unforeseen arrives. Not having those answers is well….stressful.

Unfortunately, we can’t change the ebb and flow of geopolitics and the global economy. The best we can do is to identify the necessary resources to weather an unforeseen loss of revenue or a drastic increase in costs. Nine out of ten times, cash is that necessary resource. The most successful businesses know this well: the single best defense against an unpredictable business environment is a cash position which remains strong throughout the business cycle.

The preceding has not been pulled from thin air. A primary reason traditional financing isn’t available to those who most need it is that banks are stockpiling cash in anticipation of the next unforeseen economic catastrophe.

In doing so, banks are able to protect shareholder value and preserve financial stability; for various reasons (not the least, common sense), we expect this strategy to continue.

Small and medium import businesses need to know they can implement the exact same strategy to protect their livelihood as global banks do for their shareholders.

They need to know there are tools designed specifically for them to achieve this end; tools that give even startup businesses (among the least credit-worthy) the power to hedge against their worst case scenario by keeping cash reserves strong.

Since 1999, we have been laser-focused on helping importers by maximizing available resources throughout the business cycle.

WESTCAP has relieved a lot of stress over the years, and we can do it for you.

One of our experienced professional would be happy to help you strategize for future success.

Call, write, or stop by anytime; there’s no reason not to say Hi!

Yours in Prosperity,

WestCap Inc – West Capital Markets

 

FCR vs BL

FCR-vs-BL

Why exporters and importers are using a FCR certificate?

FCR certificate mainly used in international transactions where Ex Works(EXW) trade term is selected by the parties.

According to ICC’s Incoterms 2010 rules “Ex Works” means that…………

Business Finance – Problems & Solutions

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BUSINESS FINANCE PROBLEMS AND SOLUTIONS.
Greetings!

You may have gotten the impression by now that we deal with Letters of Credit in all shapes and sizes. It’s true.  One particular type of LC we do a lot of work in is a niche product but very useful in some industries.  We’re referring to a documentary letter of credit which can be issued without collateral. Issuers of such letters of credit structure the LC in a way to manage their own capital risk and hold the shipment as collateral pending payment by the client needing the LC.This type of LC is useful to importers who may not want to draw down their bank lines for the month or two it takes for the supplier to get ready to ship the goods, but who are able to pay for the shipment when it is on the water.

It’s commonly used in the garment industry and is easily accepted in many spots in Southeast Asia, and often for CONSUMER PRODUCTS.

Our Indian clients may recognize this by another name, as it is sometimes called an accommodation letter of credit.

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An LC Problem Solved

 

Greetings!   westcap_0001_Layer 6                                                              We perform a number of tasks related to letters of credit. Last month we assisted a client in getting paid immediately against a Documentary Letter of Credit that was due to have funds released four months after the necessary documents were presented. In the industry that’s called a usance LC. (When dictated into the phone, it came up “useless Elsie”. There are still a few bugs in voice recognition).The issuing bank was in a non-European country with Mediterranean beaches and the client was here in the US. To complicate things further our client was providing services, not goods, to his Middle East customer and the letter of credit was to pay for those services.We and our partners made certain the correct documents were required in the letter of credit to satisfy LC requirements so that the bank could advance the money.  This is trickier than you might think; banks are a lot more comfortable with LC’s related to goods rather than services.After that part, the last bit was much easier: getting the client paid immediately (at sight, in LC parlance), even though the LC specified payment in four months from date of document submission.  As it happens, the interbank rates in such cases are usually much less than normal bank interest charges to customers, so the customer saved money here too when those lower charges were passed through by the bank.

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ADVANCE PAYMENT GUARANTEE

An advance payment guarantee is a form of protection that makes it possible for a buyer to recover any advance payments extended to a seller in the event that the seller fails to abide by the terms and conditions that govern the purchase of goods or services. A guarantee of this type may be used in a number of situations, including deals where goods are imported or exported. It is also used with domestic transactions, such as the purchase of heavy equipment, construction projects, or even large lots of retail goods.

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