Rice Authority offered payment method can greatly affect the price offered by the Seller; the more secure the payment the cheaper the price.   Sellers are looking for more security in payment and because of high percentage of drop outs paying by ordinary DLC.    Very few sellers will offer this payment option anymore.    Our minimum payment option is IRDLC revolving for one month’s shipment value.   For larger contracts the seller is looking for one month’s shipment value held by the Seller as surety against the buyer dropping out.

So what does all that mean?    In the past a buyer would contract a quantity say up to 12 times more than the quantity they actually required; they pay for 1 or 2 shipments and then drop out; after having obtained the benefit of a price offered for the much larger quantity.   Also buyers would drop out of a contract because they had since found a seller with a cheaper price.

Payment options can vary with the commodity, such as sugar, where payment may be mandatory by FFBG with some sellers.   Our payment options will be clearly outlined in our Soft Offers.

OUR PAYMENT OPTIONS

Note all payments must be Confirmed by Top 50 Prime World Bank; please check our website for latest Top 50 list.

Confirmed, Irrevocable Letters of Credit give the seller the greatest protection, since sellers can rely on the commitment of two banks to make payment.    The confirming bank will pay even if the issuing bank cannot or will not honour the draft for any reason whatever.   In accordance with the additional risk assumed by the banks, however, confirmed, irrevocable Letters of Credit are more expensive than unconfirmed Letters of Credit.

Here are several payment option preferred by our Sellers:

  • IRDLC – Payment by Irrevocable, Transferable, Auto-Revolving for one month’s shipment value, Documentary Letter of Credit, Confirmed by Top 50 Prime World Bank, 100%at sight Port of Loading.
  • FFDLC – (assured for 6 month contract value)   Payment by Fully Funded, Irrevocable, Transferable, Auto-Revolving for one month’s shipment value, Documentary Letter of Credit, Confirmed by Top 50 prime world bank 100% at sight Port of Loading

Basically with this payment there is an LC opened for 6 months value that is guaranteed by the Buyer’s bank for that amount.   In the fifth month, there is another 6 month LC opened for the last batch of shipments. However, the payments are still paid one month at a time, but the LC is guaranteed for 6 months value.

  • FFDLC –  (assured for full 12 month contract value)    Payment by Fully Funded, Irrevocable, Transferable, Auto-Revolving for one month’s shipment value, Documentary Letter of Credit, Confirmed by Top 50 prime world bank 100% at sight Port of Loading.

This LC is guaranteed by the Buyer’s bank for the full contract value.

  • IRDLC + BG – Unconditional Bank Guarantee for one month’s shipment value held as security for payment and then monthly payments by Irrevocable, Transferable, Auto-Revolving for one month’s shipment value, Documentary Letter of Credit, Confirmed by Top 50 Prime World Bank, 100%at sight Port of Loading.
  • IRDLC + BG (3 month) – Payment by Irrevocable, Transferable, Bank Guarantee for 3 month value to be held by the Seller as security for payment.   This Bank Guarantee will be returned to the Buyer at the end of the contract period unencumbered.    Each Shipment shall be paid for via Telegraphic Transfer within 24 hours of receiving the shipping documents.   This Irrevocable, Transferable 3 month Bank Guarantee should be issued, Confirmed and Guaranteed by Top 50 Prime World Bank acceptable to the Seller.
  • FFSBLC – Payment by Irrevocable, Fully Funded, Revolving Stand-by Letter of Credit for the total value of the goods with one month face value.    The Irrevocable Revolving Stand-by Letter of Credit should be issued, Confirmed and Guaranteed by a Top 50 Prime World Bank acceptable to the Seller.
  • BG or FFBG – Payment by Bank Guarantee Confirmed by Top 50 Prime World Bank.

The Buyer’s bank is guaranteeing the funds for the full contract value, therefore with payment by BG means the buyer has the money sitting in an account, pledged – that is why it is called ‘Bank Guarantee’.

There are other acceptable payment methods and also variations of these payment methods above applicable to certain commodities that we may accept, however these will be advised in our Soft Offers.

Please clearly define your preferred payment when making your application for quotation.

PLEASE NOTE: We always require a BCL (Bank Comfort Letter) to confirm buyer’s ability to make the necessary payments, provided along with the LOI or ICPO.

Whilst permission for a Soft Prove which may be offered in the LOI is nice, it is not recognition of a commitment to the contract in hand.   A BCL should list a description of the goods, the quantity, the total contract value and the monthly revolving amount etc. expressed in US Dollars.   Also as payment is Confirmed by a Top 50 Prime World Bank this is virtually a guarantee of such payment as outlined.

BCL with bank disclaiming any responsibility is totally unacceptable.

If a buyer will not provide a BCL it is an indication that he cannot finance the deal and/or the deal is not Confirmed by Top 50 Bank as required.