A short term loan facility extended to an importer for a determined time period by an overseas lender consisting of banks or any other money lending financial institution for trade finance to aid trade operations by providing business capital and facilitating imports of goods and other big-ticket items. The international merchant, to whom the loan is issued is the individual involved in buying goods, and the exporter is known as the seller. Buyer's credit offers an economical approach to importers for securing funds compared to what is available locally and consolidating its stance as a popular and a beneficial trade finance facility. It provides import finance while facilitating the interest of the importers by benefiting their trade operations. In simple terms, buyers credit meaning is a credit facility to support the effectuation of trade operations dispensed to the importer. The rates, including the interest rates incurred by an importer while getting financed domestically might be higher. In contrast, buyer's credit deploys a more advantageous solution in terms of the overall savings due to lower interest rates to an importer. The exporters involved in the trade transactions are also guaranteed timely payments upon utilization of buyer's credit by the importer to support his/her operations associated with a deal entered by both the parties. It also allows the user to carry through large orders that would have been substantially difficult otherwise, thus halting business expansion and growth and enables the importer to obtain financing and flexibility to pay for large orders.
Buyer's credit process flow
Accessing buyer's credit has its own set of benefits that both the importer and exports involved in the trade experiences including availing finance against import bills, payment security to the exporter wherein the customer should be an existing current account holder in a bank with some exceptional cases in which banks provide buyer's credit even without a current account. The buyer's credit process has a lot of steps involved, the details of which are mentioned below.
What is Supplier's Credit?
Supplier's Credit implies a type of agreement in a commercial contract involving exporter and a foreign buyer under which the exporter has the job of supplying goods and services to the foreign buyer on credit terms. As the term exporter is interchangeable with supplier, this agreement is called supplier's credit.Overseas bank and financial institutions provide funds to importers at LIBOR linked rates offering a more economical approach compared to locally available funding wherein the funds can be issued against usance letter of credit. Supplier credit meaning is further understood as a structure which facilitates import trade finance wherein the overseas financial institution provides financing to importers in this system. There are numerous benefits of suppliers credit for both supplier and importer as for importer this serves as a means to ease short-term fund pressure by being able to get credit with the availability of negotiating a better price for the suppliers and provides the ability to meet the supplier's requirement of payment at sight. On the other hand, for the supplier's side, it avoids the risk of importer's credit by making a settlement with LC. This supplier's credit facility is provided by foreign banks or the Indian banks which have their respective branches abroad to the importers for the purpose of imports into India.
Suppliers' credit process flow?
The benefits dispensed to the importer and exporter through supplier's credit encompass realization of payment on sight along with strengthened security against payment default for the supplier while the importer is able to access cheaper funds for import of capital goods and raw material in conjunction with reducing fund pressure. The supplier's credit process flow has a lot of steps, the details of which are mentioned below.
Difference between Buyer's Credit and Supplier's Credit?
Although both the buyer's credit, as well as supplier's credit, are facilities that extend credit to the importer, the change in their source of credit causes a distinction between them.
The trade financing services including Buyer's credit and supplier's credit extended by Myforexeye provide a convenient solution through an easily navigable platform dispensing easy access for acquiring best quotes from overseas banks requiring minimal steps and no additional charges to individuals involved in the export and import industry. The Forex Current Account enhances the scale of your business by allowing cross border forex transactions along with the availability of real-time forex rates that fortifies your understanding of the value that one can expect upon payment associated with overseas trade upon the determined period of deal maturity.
Myforexeye is the one-stop solution for all the forex needs of organizations irrespective of their scale and individual forex enthusiasts wherein our services discharged are powered by advanced technology, armed with the expertise of experienced professionals and executed by our specialized team. Our user-friendly platforms- web portal and mobile app encourage actualization of our objective of providing a transparent streamlined process which meets the forex demands of users in a convenient manner eliminating the aspect of hidden commissions. Our consultants help users manoeuvre challenges and risks associated with the forex market and render strategies and techniques to mitigate them. Enabled by our lack of obscurity, our services empower users to make savings corroborated by our platform that provides an insight into real-time rates and best quotations from banks to equip you with the best possible options.
Speak to one of our specialists to acquire a detailed understanding of Trade Finance services extended by Myforexeye.
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