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Expert Insight Series: RHDC

Using Letters of Credit to Expand Your International Sales

RHDC International, the Letter of Credit experts and a long-standing member of the Bilateral Chamber, can offer support for your international documentary credit transactions. As U.S. companies begin to expand their search for new clients in foreign markets, the question of how to get paid for their product can be a challenging undertaking. While some U.S. companies are willing to take the risk of exporting their goods to a foreign buyer and then wait to get paid, many companies just cannot take on that risk and need a more reliable and less risky form of payment.

Many companies turn to a Letter of Credit (Documentary Credit) as their preferred method of payment. A Letter of Credit can be issued by the foreign bank on behalf of the importer and provide security for both the exporter and importer in the transaction. The seller receives an advance assurance of payment upon presentation of documents conforming to the terms and conditions of the letter of credit, and the buyer is assured that the bank will not pay unless the seller has submitted documents strictly complying with the documentary credit.

Once the seller and buyer have agreed on the terms of the Letter of Credit (L/C) and it has been Advised by a U.S. bank, then the seller can begin production and fulfillment of the order and prepare for shipment. The next challenge for the exporter is making sure that the documents that they prepare and present to the bank for payment conform to the terms of the L/C. Documents that do not strictly conform to the terms of the L/C will be considered discrepant resulting in additional bank fees for the exporter and slowing down the payment process for them as well.

While some exporters choose to navigate through the documentation themselves and make their own bank presentation, many companies rely on experts to assist them in mitigating their risk for payment under these types of transactions. RHDC International has been providing L/C documentation services for more than 30 years and focuses on helping exporters protect their ability to collect their money under their L/C transactions.

RHDC works with exporters and freight forwarders all over the country in all facets of their L/C transactions. RHDC can review L/C drafts as the terms are being negotiated to help ensure the sellers ability to comply once shipment is made. After shipment takes place, RHDC will then take charge of preparing the documents and will work with all parties involved to ensure a compliant bank document presentation. This will help ensure a timely payment process for the seller of the goods.

The above illustrations represent the typical process for the issuance and payment process for a Letter of Credit. To learn more about RHDC International and their L/C services as well as other services that they offer, please visit their website at www.rhdc.com. You can also contact them by phone at 713-863-8080 or toll free at 800-468-3627.

 

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