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.

TrumpYou may be thinking we’re just trolling for readers by mentioning the biggest, hugest name in American politics this election year.  But no. We were fascinated by an analysis of the national and global effects of a Trump presidency. You might be, too, if you like that sort of thing, focused mostly on the economic effects.  Apart from the article, one could reasonably wonder if, based on campaign rhetoric, the French are considering asking for their Statue of Liberty back.
Business as (Un)UsualThe financial markets began by imploding in on themselves. And oil fever, or maybe more a rash, is spreading to the banks who loaned like there was no tomorrow.  We’ve seen a number of explanations for the decline in oil, but believe the simplest may be the best.Imagine that you are one of the eminences who control billions of barrels of crude.You read the news and consider:

  • the consensus of climate science
  • growing movement to divest fossil fuels from endowment portfolios
  • global agreement to reduce fossil fuel usage
  • coal as an indicator of things to come in oil

Remember, you own untold amounts of something society wants to and has the technology to replace. Wouldn’t you want to convert your assets into as much cash as you can as quickly and quietly as you can, while publicly maintaining you love your oil and you haven’t a care in the world?

Get in touch if we can assist you with cross-border transactions (even fuel-related), either for assistance with letters of credit or international and domestic factoring.We call it Jigsaw Capital because to us, life is a series of puzzles to solve. Financial puzzles, that is. We don’t have the time for jigsaw puzzles these days.Authored By:

Doug Freidenberg

 

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