Credit Check on Chinese Supplier
Discussion
We've been trading with a Chinese supplier for a couple of years now, after 12 months they gave us a credit line of $100,000 USD.
We've never really come near it, usually $10 - $15k a month and pay when due. No problems there.
We've had credit removed and the reason they've given us;
I regret to inform you that because our company is facing with the problem of fund shortage, we have to stop all of our clients' open credit amount untill further notice. So pls note the terms of payment has been changed into T/T should be made before the shipping date. Hope you can understand our hard position and support us as usual.
Not a huge problem for us as it's how we traded with them previously.
I'm just rather concerned about sending up to $15k at a time to them if they have a fund shortage. They're a large Chinese manufacturer and well known in their respective industry over here.
I'd like to check them out in a bit more detail, we use CreditSafe for checking out UK customers before extending them credit but wondered if anyone had any advice on who to use to do a bit of digging?
We've never really come near it, usually $10 - $15k a month and pay when due. No problems there.
We've had credit removed and the reason they've given us;
I regret to inform you that because our company is facing with the problem of fund shortage, we have to stop all of our clients' open credit amount untill further notice. So pls note the terms of payment has been changed into T/T should be made before the shipping date. Hope you can understand our hard position and support us as usual.
Not a huge problem for us as it's how we traded with them previously.
I'm just rather concerned about sending up to $15k at a time to them if they have a fund shortage. They're a large Chinese manufacturer and well known in their respective industry over here.
I'd like to check them out in a bit more detail, we use CreditSafe for checking out UK customers before extending them credit but wondered if anyone had any advice on who to use to do a bit of digging?
Have a look at issuing a letter of credit, their are some advantages to using this method of payment for international trade, especially if you are concerned with the order being fulfilled/quality of order/shipping etc, with anything as ever their is a cost.
You should be able to get one of these issued by your bank.
GOV.CO.UK has a guide on this if you need any further info.
You should be able to get one of these issued by your bank.
GOV.CO.UK has a guide on this if you need any further info.
Yes, that will solve their (and your potential) problem, underwritten by your side (bank), and they will be able to draw on the “LOC” from their bank.
It’s a very “formal” way of international trade.
You may want to look at currency hedges (if they want USD etc), as your LOC will be in the currency they require (appreciate its circa 15k an order only at present).
Or If you have your Chinese manufactured goods pre sold, a commercial finance company may underwrite the whole transaction for you.
It’s a very “formal” way of international trade.
You may want to look at currency hedges (if they want USD etc), as your LOC will be in the currency they require (appreciate its circa 15k an order only at present).
Or If you have your Chinese manufactured goods pre sold, a commercial finance company may underwrite the whole transaction for you.
Deesee said:
Yes, that will solve their (and your potential) problem, underwritten by your side (bank), and they will be able to draw on the “LOC” from their bank.
Well that deopends on what triggers the release of payment by the bank. if the trigger is the goods being ready to ship then it would protect the buyer as the bank will require sight of shipping documents so presumably the items exist. If there's any other trigger then it become questionable how much protection an LC provides & whether it's worth it. There are costs involved as well which someone has to pay. Mr Pointy said:
Deesee said:
Yes, that will solve their (and your potential) problem, underwritten by your side (bank), and they will be able to draw on the “LOC” from their bank.
Well that deopends on what triggers the release of payment by the bank. if the trigger is the goods being ready to ship then it would protect the buyer as the bank will require sight of shipping documents so presumably the items exist. If there's any other trigger then it become questionable how much protection an LC provides & whether it's worth it. There are costs involved as well which someone has to pay. If they decide to draw on the LOC and don’t deliver your requirements that’s a contract with their bank and your bank.
Your LOC will be on what you have specified and what you have agreed to pay.
Anyway OP, might be for you, might not
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