Despite trying your best to make the transaction go as smoothly as possible and selecting the safest method for payment, you cannot guarantee that the buyer will pay, but you can still
It’s not unusual for L/C to become Discrepant, but when it happens it brings additional costing as well as delays the entire process.
Here’s what you should do to avoid discrepant of L/C or what to do if you are stuck with one:
There are private as well as government institutions which offer ECI.
As USA has Exim bank and India has export credit guarantee Corporation of India aka ECGC.
In India ECGC offers various kinds of plans which offer up to 90% coverage. There is SEP (small exporter’s policy) which takes care of firms having turnover of Rs.5 Cr or less. MEP ( Micro Exporter Policy ) is also there which targets firms having turnover of less than a crore.
Considering all factors there are few things ECGC do not covers which you may find below :-
⁃ Loss which happens due to quality issues.
– Exchange rate fluctuations result in loss.
⁃ Buyer not getting successful in obtaining import authority.
⁃ Risk involved because of the nature of goods that are being exported.
In Export Factoring the exporter sells their commercial invoice to the financier (who is also known as “factor‘’ ) at a discount. When the invoice is sold 80% to 90% of the invoice amount is given to the exporter by the factor, and when the factory receives the payment from the importer, they release the balance amount to the exporter after deducting their fees and interest. Factoring fees depends upon the buyer’s financial standing also on the type of goods, it may also get affected by political and economic stability of the market.
Here are few most common factoring service offered in the market:
The above discussion showed there are thousands of ways a person can try to secure payment. The choice of the correct method of payment for yourself completely depends upon the type of transaction and the risk factors involved in it. Be sure to also consider your buyer. You just need to make sure that there is a balance between yours and their interests.
To Know More
There are certain certificates that you must obtain from the concerned departments regarding the following items: