Benefits to the Importer

• Helps local importers gain access to cheaper foreign funds close to LIBOR rates as against local sources of funding which are costly compared to LIBOR rates.

• Availability of cheaper funds for import of raw materials and capital goods.

• Ease short-term fund pressure as able to get credit.

• Importer can make the payment at sight to the exporter and command a better price in terms of cash discount

Benefits to the Supplier 

• Realize at-sight payment

• Avoid the risk of importer’s credit by making settlement with LC

We shall study about this article further, in detail, in our next post.

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