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FINANCIALLY SPEAKING
Important matters mostly to do with money and banking, and the common mistakes we keep on encountering, are as specified below in a straightforward manner. We have changed some of the main scenarios offered herein to ensure we do not breach matters of confidentiality; as confidentiality is also another big issue in this business; which we will discuss in another website page.
SLC : STAND BY LETTER OF CREDIT
A supplier may like the attributes of a Standby Letter of Credit (SLC). Why not? The supplier gets paid regardless of what is on board the vessel and the required transport documents that are needed to be presented, are casually presented–or not at all. When an SLC is advised to a supplier, it is advised as ‘unconditional.’ The purpose of the SLC is just that - immediate payment on demand, not unlike issuing a personal cheque; except an SLC once advised, its payment is assured by the bank issuing such–at call.
A buyer of commodities must not use a SLC to pay for imported goods ordered from a supplier let alone anyone else for that matter. How such instruments are allowed to be issued from some banks to pay for goods located in another country, is also questionable- albeit, banks cannot get involved in the matters of contracted goods; may have something to do with this aspect, as the nature of the bank's business is not about goods, but money. Having said that, most large banks around the world using the SWIFT payment system, act honourably - but not all–has been our experience. In essence however without banks supervising such payments, trading in commodities would be a highly risky proposition. Banks supervise import export transactions in matters of payments as skilled ‘intermediaires’ and deservidely earn a fee for their specilaised and unique services–not unlike FTNX who is also offering a specialised and unique service.
About 20 years ago (2005), FTNX had secured a huge revolving contract for the supply of petroleum based products from a high profile Russian supplier ‘Yukos.’ When the time came to discuss payments the supplier would not accept the DLC offered as payment for goods on offer, because as she stated to FTNX, “anyone can steal the money from our office, and run away to Brazil, like they have done before.” It was obvious to me that the supplier was using employees in a high corporate position, that didn’t even understand how a DLC is applied for collection. It was in the following year when we crossed paths again that I became aware that they were talking about being paid by a SLC and not a DLC, which is a very different instrument. I gave a lesson to the Russian based employee about the use of a DLC and not SLC, but I could not convince her to change her thought processes. “The firm had been bitten once before from intermediate players within Russia,” she said in broken English. The employee then went on to say that , “If I wanted the product, I personally need to come to Russia, sign the contract, and make payment locally into a bank as cleared funds.” This aspect was never going to happen–was my immediate response. I was shocked to learn a few months later that the firm had gone bankrupt, and its CEO was arrested on fraud charges.
The end buyer must not be tempted to pay for commodities using a SLC, all because “a special” deal is apparent, no matter who the supplier is. There are a lot of intermediate players within corporations not unlike ‘Yukos,’ all round the world, who on the side, delve ‘beyond their scope’ (often used legal terms is ‘Ultra Vires’) using their current position within a corporation that employs them, to define some kind of legitimacy to a commodity supply deal. The intermediate ill informed trader often wants an SLC because they can realise their gains intermediately even before the goods are loaded or even ordered. The end buyer should always trash any offer where the ‘seller’ is asking for a SLC as payment. This is the first sign that you are dealing with an ill informed person or a dishonourable person or both.
All Goods are Paid by a Bank Issued DLC
All goods are paid by a DLC (a documentary letter of credit ) as endorsed by the ICC where UCP 600 banking rules (as current) apply to its issuance and URC as current, as to matters of collecting upon the financial Instrument – when the DLC is advised by a Bank. A DLC issued by a corporation applying UCP rules is allowed, but FTNX does not accept such a credit. Only bank issued instruments are considered as the DPC issuing bank is ‘guaranteeing payment’ once the conditions of the credit are met. A end buyer who cannot open a bank issued DLC on a large order, should not seek commodities from FTNX is being sugessted.
FUTURE INSIGHTS TO BE POSTED IN 2025
Related added information will be posted at the end of each section form time to time, serving more insight as per the contents of the webpage. Please check below each website page, once a month to remain current and updated
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Disclaimers:
A supplier is deemed as the disclosed entity in possession of export goods on offer. An ill informed intermediary is deemed to be a person who has not studied the FTNX doctrine of trade. A USCT endorsed trader has fully studied the said doctrine.The end buyer is deemed as the entity paying for and taking possession of goods ordered from FTNX. FTNX is a buyer or seller at any given time. This website is in effect as an Intranet designed for use by FTNX endorsed USCT members and relevant others 2016 onwards. This website is a private members site, which has no Google ranking and no ranking is sought. All business conducted with FTNX is done on a highly confidential platform where strict procedures apply. All opinions as apparent on this website served without prejudice. All opinions, advice and information served herein, is advised by a world leading trade expert Davide Giovanni Papa as relevant to the specific nature of business being prescribed. No advertising is permitted on this site. Due to the terminology used, this site will mostly benefit said USCT members as well as suppliers and end buyers world wide wanting to learn or remain in touch with current trading events and procedures as created and applied under the FTN Exporting Doctrine of Trade. Dishonourable people have placed FTN Exporting on their mailing list to imply association. FTN exporting is owned by Davide Giovanni Papa who is a sole trader and educator not associated with any other entity or any mailing list they apply. No phone number or mailing address is available online; such information is served as necessary. Zehed-Bike investment project will be owned by FTN Exporting as created by its inventor Davide Giovanni Papa. Melbourne, Australia © 2022. FTNX USCT and FTN Exporting are to become separate PTY LTD entities 2026. All trading business initiated by a FTNX USCT registered member means FTNX Davide Giovanni Papa is the disclosed principal of a USCT member, when a verifiable and valid USCT number is apparent, when sourcing goods on our behalf. FTN Exporting reads all emails, but will only respond on merit or relevancy .
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