Can an Importer Combine Multiple Bills and Avail a Single Buyer’s Credit Quote

There could be instances where an importer has to make multiple payments to the same exporter. The importer can choose to combine all the bills and avail a single Buyer’s Credit quote, which would help him reduce various costs that are associated with availing Buyer’s Credit. Advantages:Generally, transactions with higher value would fetch better quotes in the market. i.e. if there are 3 bills of 30,000 USD each for 90 days, the interest rate/cost in the isolation would be much higher than a single quote for 90,000 USD.Multiple BC quotes mean additional LOU charges and arrangement fees as it’s linked to the number of offer letters issued.Obviates the delay and hassle of obtaining multiple quotes either from the bank or the consultants.   Things to consider while opting for such transactions:Importer should check with his bank i.e. the LOU issuing bank on availing Buyer’s Credit by combining multiple bills.Payment due dates could vary between each bill so the importer has to choose specific drawdown date and opt for BC accordingly.  Process Flow ChartProcess FlowImporter decides on the drawdown date.Importer has to inform his bank on combining multiple bills and execute a single BC transactionImporter takes BC quote either from the bank or consultant post providing the details of multiple bills.Importer’s bank issues LOU /LOC with complete details of all the bills involved in the transaction.Overseas lender or the funding bank funds the cumulative amount of all the bills as requested.Post receipt of funds, importers bank makes payment to the   exporter/ supplier as per the details provided in the bills.
Kranthi Tilak Reddy
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Can an Importer Combine Multiple Bills and Avail a Single Buyer’s Credit Quote

Kranthi Tilak Reddy
Blog
31st Oct, 2017
Can an Importer Combine Multiple Bills and Avail a Single Buyer’s Credit Quote

There could be instances where an importer has to make multiple payments to the same exporter. The importer can choose to combine all the bills and avail a single Buyer’s Credit quote, which would help him reduce various costs that are associated with availing Buyer’s Credit.

Advantages:

  1. Generally, transactions with higher value would fetch better quotes in the market. i.e. if there are 3 bills of 30,000 USD each for 90 days, the interest rate/cost in the isolation would be much higher than a single quote for 90,000 USD.

  2. Multiple BC quotes mean additional LOU charges and arrangement fees as it’s linked to the number of offer letters issued.

  3. Obviates the delay and hassle of obtaining multiple quotes either from the bank or the consultants.

  Things to consider while opting for such transactions:

  1. Importer should check with his bank i.e. the LOU issuing bank on availing Buyer’s Credit by combining multiple bills.

  1. Payment due dates could vary between each bill so the importer has to choose specific drawdown date and opt for BC accordingly.

 Process Flow Chart


Process Flow

  1. Importer decides on the drawdown date.

  2. Importer has to inform his bank on combining multiple bills and execute a single BC transaction

  3. Importer takes BC quote either from the bank or consultant post providing the details of multiple bills.

  4. Importer’s bank issues LOU /LOC with complete details of all the bills involved in the transaction.

  5. Overseas lender or the funding bank funds the cumulative amount of all the bills as requested.

  6. Post receipt of funds, importers bank makes payment to the   exporter/ supplier as per the details provided in the bills.

Kranthi
Blog Author

Kranthi Tilak Reddy is one of the co founders and COO of White Matter Advisory services P Ltd. He is an Engineering graduate from SRM University and has done his Masters in finance.Being a true go-getter and an optimist to the core he has grown up the ranks in banking industry at an astonishing rate, his last stint being Associate Director, Business Clients -South with Standard Chartered Bank. With over 10 years of association with SME businesses and clients he certainly brings rich vein of expertise to the WMA table but more importantly his alluring passion towards great and customer service” the foundation on which he asserts WMA has been built.

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