Many companies cannot make Long-term letter of credit. And if you can't even make sight letter of credit, don't read this post! Because it’s no use for you so don't waste your time!
首先报价的时候TT,LC at sight, LC 90 days的价格是完全不一样的，肯定是递增的，客户心理清楚，也能接受，这是一个让客户接受假远期的前提：LC90days成本要高于LC at sight。
At first, the quotations of TT, LC at sight and LC 90 days are completely different and is definitely increasing, which the clients' mentality is clear and acceptable. A prerequisite for clients to accept the false future is that the cost of LC90 days is higher than At LC at sight.
当客户提出LC 90days，而你坚持LC at sight，僵持不下的时候，可以果断的提出假远期信用证，对于你，是即期，对于客户是远期，各得其所！
Clients come up with LC 90days while you insist on LC at sight. When you face such dilemma, you can decisively come up with fake Long-term letter of credit. For you, they are LC at sight; for customers, they are Long-term letters of credit, which makes both sides satisfied.
Many people do not understand what the term of spurious Long-term letter of credit means. It is popular to say that the fake Long-term LC or real one are a standard LC, which are subject to the control of the LC, but it has one distinct characteristic:
1. 远期汇票即期承兑。也就是规定汇票上写，90 days,45 days，30 days，标准的远期汇票，但是信用证里另外还有一句话规定，远期汇票即期议付！也就是虽然是远期汇票，但是可以即期使用。
Long-term bills of exchange are accepted at sight. That is to say, a 90-day, 45-day, 30-day or standard long-term bills of exchange are written on the bill of exchange, but another sentence in the LC stating that the forward draft must be negotiated on the spot! That is, although it is a long-term bill of exchange, it can be used at sight.
Interest is paid by the issuer. In this process, a payment on account by banks in advance will appear and interest will be generated which is borne by the issuer.
The second point is that the long-term price that I said above is higher than the price at sight, so that when you quote a price to the client, you still quote the spot price. But because of the interest taken by the client, his cost is still higher than that of the spot price, which is normal and customers can accept.
There is another advantage for the client. The bank's requirements are strict on Issuing a long-term LC, which requires you to mortgage a lot of things and then give you a credit; while for false forward, it is more advanced credit of the bank’s and only needs to give certain deposits. After that, you can use the bank's money first to buy goods and the client goes to the bank to repay the loan and the interests when it’s due.
If the client's credit is good, it is no problem to open a long-term LC.
There is a conversation from the Internet. Let’s take a look:
Dialogue between an importer and an exporter:
Importer: We lack no money now, so could I pay half to ease, and then give you the left over a period of time. What do you think?
Exporters: I’m sorry, no. Buddy, our boss said that the recent economic form is not well, so we can't engage in a long-term LC. Moreover, it’s our first cooperation, so I hope we make it simple, for there are more longer-term cooperation between us.
Importer: Ok, I go to cast out for other ways.
Exporter: Oh, buddy, now there is a fake LC in the bank.
Importer: What is fake LC? I have not heard of it...
Exporters: You could go to inquire the issuing bank.
Importer: Oh, thank you! I go back and think of solutions.
Dialogue between the importer and a bank:
Importer: I heard that you have engaged in a false LC business?
Bank: Yes, are you going to do it?
Bank: Actually, it's very simple. You buy goods, and our bank will have a payment on account in advance for you. And you could return it to us in installments, or return when it’s due, but...
The importer thinks it’s so great, and he was eager to know what was behind.
Importer: But what, just say, how could your attitude be so...
Bank: But you have to pay some interest.
Importer: It doesn’t matter at all. Just a little interest. What a fuss. Well, please help to issue one.
The importer is daydreaming. Now I don't have to pay anyway. When it's time to return, I will return it if I could do so; If not, I can still owe them. And you'll be classified as an illegal loan.