Are your customers pushing you on terms?
Problem: Your customers are pushing on payment terms.
Solution: Post a documentary letter of credit for your mat purchases. World Forest Group can provide you with up to six-month payment terms thereby satisfying your customer.
Unintended Consequences:
- Safer transaction and reduced risk by protecting the buyer with two additional layers of oversight.
- You may find that offering longer terms to your customer provides you with a competitive advantage in the bid process by combining a superior product with superior payment terms.
How does it work and what is it? (Short summary. More details on request.) An Irrevocable Documentary Letter of Credit is a financial instrument used by banks to guarantee buyers and sellers obligations to each other.
General advantages: Buyer’s and seller’s banks have the relationship rather than buyer and seller. By replacing companies with banks, risk and cost of business is reduced.
Specific advantages for buyer:
- Seller is not paid until proper documentation is submitted to buyer’s bank. Documents are generated by the largest and most credit worthy transportation companies.
- Buyer’s bank reviews documentation extremely stringently adding a layer of comfort and expertise on top of buyer’s normal back office operations.
- Financing: Banks borrow and lend to each other at much lower rates than customers and vendors do.
Who is World Forest Group LLC’s bank? Wells Fargo NA
