What is the receiving credit?

The receiving credit is one of the form of the letter of credit. This particular type is often used in situations involving international trade relations between the buyer and the seller. This arrangement, sometimes referred to as acceptance financing, allows the creation of a bank account known as acceptance credit facilities, which is then financed on the basis of the buyer's credit development. Within the provision, the Seller is obliged to repay the reception loan within a specified period of time. Meanwhile, the seller is able to draw from the balance of this account up to the credit line.

The use of an acceptance loan is very common when the buyer and the seller have established a working relationship over the years. Both benefit from the agreement, and the seller was able to use the sales revenues before paying the payment. At the same time, the buyer is equipped with a time window to settle the debt in full, which is a factor to be particularly important if it has a plan to sell imported goods with profit shortly after they are received.

Using the receiving loan are associated with certain risks. This is especially true if the debt tool is not confirmed. In this scenario, the seller risks the risk that the buyer may not be able to or willing to appreciate the debt due to circumstances such as delay in transport, seizure of the consignment by the customs authorities, or any other problem that causes the buyer to miss the opportunity to sell goods as expected. At the same time, the confirmed reception loan could be a problem for the buyer if the shipments are lost or delayed because the credit issuing bank guarantees a debt tool and eventually requires the buyer to appreciate the debt no matter what could happen in transport.

It is important that confirmed receiving credit is more expensive than unconfirmed loan for acceptance. Sellers who require the former to allow the difference in calculating the purchase price and to effectively compensate the amount. RashEDEM also allows the Seller to give up the liability for the shipment as soon as it is delivered to the carrier, the confirmed acceptance leaves the question of lost consignments between the buyer and the shipping company, as the seller fulfilled its obligations in the transaction.

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