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You have a supplier who insists on an LC to be opened or needs some other assurance of payment. If an LC is opened, you tie up cash credit limit with your bank apart from incurring costs for opening the LC.
Import Factoring is a new alternative to opening of an LC. As a result, your supplier will be able to offer open account trading to you combined with his need for the credit risks to be covered.
HOW DOES IMPORT FACTORING WORK?
Import factoring works on a two factor platform. Your supplier approaches an Export Factor in his country and requests for a credit line on you. The Export Factor applies to the Import Factor (herein SBIGFL) for collection and due date payment services and evaluation of credit risk on you.
We grant a credit line to the Export Factor on evaluation of your Company. Credit line means a credit risk evaluation up to the specific amount and refers to buyer insolvency or inability to pay. As soon as the factoring agreement is concluded between the supplier and the Export Factor, you can start to purchase the goods from your supplier on open account terms without opening a LC. On due date, you will pay the amount to SBIGFL against full discharge of your liability. |
