Our recent letters have highlighted some of the opportunities that we now see relating to more effective use of letters of credit. There happen to be stunning limitations within the banking systems in different countries in the world, not just in developing nations but even within the European Union. One advantage we have is the ability to bring receiving banks into play which are still entrepreneurial in encouraging and being open to assist in trade finance.
Then there’s Africa. We think Africa is very fertile ground for business expansion. In Africa there are natural resource-based economies expanding through demand for their products. So there are more people in those countries who want to buy things which someone has to import. Limited bank capital continues be a problem in Africa but we have a couple of ways to help solve the problem. Many banks want to pay with a usance letter of credit: that’s a letter of credit that has a delayed payment maybe 2, 3, or 4 months later. That doesn’t work for most suppliers, which is why a lot of transactions get stopped in their tracks. Along with our partners, we’re often able to discount a delayed letter of credit and get suppliers paid at sight.
We have to look at the deal and make certain that everything lines up properly all the way from the language in the letter of credit to the issuing bank to finding the right receiving bank and coordinating with the supplier. If that can be done, then we can assist you in increasing your business with African importers.
And it’s not just for Africa. Our clients tell us that many customers in the Middle East and some Southeast Asian countries can open LC’s but need to delay the payment for two or three months. There are local cash flow issues all over the world. We hope we can help you bridge that gap and help create a deal that otherwise never would have occurred.
As some of you know, we write about matters of interest to the investment community. Our latest offering is an interview with a portfolio manager for an insurance group dealing specifically with financial tools to help hedge out the risks of climate change. If that topic doesn’t interest you, you’ll be bored, we promise.
In other world news, the Gherkin building in the City in London, so named for its appearance, just went into receivership due to mortgage defaults. We believe the event is a candidate for the Guinness Book of World Records, as an instance of the most people screwed by one single pickle.
Please get in touch with us if we can assist in a documentary letter of credit structure that opens new business for you.