#EXPORTER DEFINITION FULL#
#EXPORTER DEFINITION PRO#

#EXPORTER DEFINITION FULL#

Reimbursement Charge: As beneficiary usually claims full payment, reimbursement expenditure will be borne by the applicant (issuing Bank).

Following cost are associated with LC/UPAS LC: The costs of UPAS LC and costs of other LC are almost similar.

It helps to provide an additional source of liquidity.

It enhances Days Payable Outstanding (DPO) by providing extended payment terms.

This LC strengthens the relationships with the exporter by allowing for payment at sight.

Foreign currency may be bought at the preferential price.

The interest rate is comparatively lower than any other finance.

UPAS LC is flexible not only for the exporter, but also it gives some benefits to the exporter, which are enumerated below:

Strengthens relationships with buyers by allowing for extended payment terms and the availability of lower-cost financing.

Maintains quality of receivables because payment assurance is still secured through the letter of credit.

Keeps the integrity of the price, as the seller does not need to build in the cost of covering extended payment terms.

Increases the marketability of products by providing buyers with the incentive of extended payment terms.

Reduces “Days Sales Outstanding (DSO)” with receipt of payment “at sight”.

The exporters will receive money immediately from the discounting bank.

This usance draft will be paid by discount on at the sight basisįor the following reasons an exporter intends to use UPAS LC:.

The customer will present the usance draft.

Customers using UPAS LC must satisfy all conditions exists in LC.

Conditions for using UPAS Letter of Credit As seller to be paid at sight but buyer will pay at a future time, so a financing source should be there to finance the transaction for the period starting from when seller receive his payment to when buyer will pay for this purchase. UPAS LC is the perfect solution that could accommodate interest of buyer and seller.

#EXPORTER DEFINITION PRO#

QuickBooks Desktop Pro 2020, now you may save up to 37%īuyer always wants to buy in credit on the other hand sellers always prefer to sale in cash. Usually, the discount fee and interest will be charged against the account of the beneficiary. On the other hand, if the applicant provides Usance LC and the beneficiary will arrange to get the bill immediately from his bank, is called discounting. The importer will be charged interest, acceptance commission and other charged as per the terms of LC for using this letter of credit. Under this Letter of credit, the exporter will get the payment at sight if the documents are credit compliant. The situation of UPAS LC happens when the exporter/beneficiary want immediate payment for his goods but the applicant may not have the facility with his bank to issue sight LC’s. Buyers Credit is used as a source of finance to settle the LC payment. Two sources of finance of UPAS LC are discounting the Export Bill and buyers credit. LC Commission is charged by issuing bank on a quarterly basis and the charge interest against the LC settled amount. What will the importer do for opening LC? The importer will consult with his bank regarding the issue and the bank may assure him to pay on behalf of the importer. Sometimes seller may not want to deliver the goods through Usance LC though the materials are very urgent for the importer/buyer but the buyer may not have surplus fund to pay the LC’s amount. after receiving the goods the buyer takes time for the payment. When the agreement made through Usance LC, the buyer will reimburse after certain time i.e. UPAS LC refers to “Usance Payable at Sight LC.” It is the combination of Usance LC and UPAS LC. Conditions for using UPAS Letter of Credit.

Exporter definition