Publications RegioBusiness website, January 2011 – www.regio-business.nl
“The Letter of Credit: a wonderful payment instrument, provided everything is done correctly,” says Marloes Wittebroek, owner of Elceco. But what is a Letter of Credit, also known as L/C? When is this payment method used? And what is Elceco’s role?
Many entrepreneurs dream of an international sales area, but the export dream is often accompanied by an extensive administrative process. Moreover, the slightest mistake can have major consequences. Fortunately, Elceco is there to ‘unburden’ the exporter.
Twofold Guarantee with a Letter of Credit
“On the one hand, you have the importer who wants to be sure of his goods, on the other hand, the exporter who wants to be sure of his money. The ‘Letter of Credit’ (LC) guarantees both parties that the transaction will proceed in accordance with the agreements.”
“Elceco ensures the fast and correct handling of the administrative process. For the sake of clarity: we have nothing to do with the processing of the flow of funds. Usually, the importer takes the initiative for an LC.”
“He contacts his bank, which in turn approaches the exporter’s bank with the request to provide a number of documents (read more about handling an L/C)”.
A Letter of Credit, or Documentary Credit, is mainly used for exports to the Middle East, Far East, Africa and Eastern Europe. In the current economic climate, companies are indeed making faster use of this payment method,” Marloes confirms the question.”
An L/C Well Arranged, from A to Z
“Submitting the required documents to the bank in a timely and correct manner is a time-consuming activity for the exporting entrepreneur. Not to mention the risk of errors, because it is really dot-and-comma work.”
“The entrepreneur relieves himself by outsourcing this process – from A to Z – to us. From screening the LC to submitting the required documents (invoices, transport documents, inspection certificates, quality certificates, embassy declarations) to the relevant bank.”
“We act as his intermediary in contacts with all parties involved like banks, embassies, Chambers of Commerce, carriers, etc. Of course, proactive action is part of our services.”
“If we believe that a deadline is not feasible (because a document has to go to the embassy, for example), we signal this in good time so that the exporter can request changes to the LC.
“After all, a Letter of Credit is anything but a foregone conclusion. Exporters do not always know this, but we are there to protect their interests,” Marloes Wittebroek concludes enthusiastically.
