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“ A fool and his money are easily parted.”


We has seen many strange requests made when it comes to paying for goods ordered from FTNX, most of which were legally and financially precarious by design. FTNX uses a documentary letter of credit (DLC) when paying for goods; as secured or advised from our top 100 world ranked Australian bank. The letter of credit  type we use must be endorsed as adhering to ICC UCP 600 banking rules. Most banks can issue a DLC, however the difference between a privately issued DLC and that which has endorsed as being UCP 600 ruling for traders in our position–is great. Privately issued credits will bear bank policies and internal rules of issuance and collection, in where the laws of country where the bank is carrying on business will also apply. A UCP endorsed DLC however must conform to a set of uniform rules that can legally apply internationally. Since the obligatory rules are known in advance, using a UCP 600 DLC  is a straightforward  application that delivers the ultimate security laden instrument, the type of security matters that a privately issued  DLC may simply not observe. For instance, under UCP 600 rules  when CIP or CIF incoterms delivery rules are used; FTNX must produce the more expensive ‘Shipowners endorsed BOL.etc.etc’ A UCP 600 DLC has bank charges applying to do with transferring the instrument, confirmation, amendments, and availing funds. In this aspect the bank plays an in important part of the whole process as banks cannot become involved in matters of the underlying sales contract and oversee the issuance of the credit and collection process as stated on the actual body of credit instrument. FTNX uses bank issued UCP 600 DLC to protect our interests and that of the clients we work with. Below are the kind of UCP 600 adhering instruments we can use along with a brief explanation attached. A corporation may also issues a in-house DLC and use the UCP 600 rules on condition that the DLC has declared on its form that ‘ICC UCP 600 Rules’ applies. Amendments to a  revolving credit  are also expensive, as such, the UCP endorsed credit allow for the amount of  credit to bear a tolerance factor of 5.0%  before an amendment in needed. The goods weight  listed on the credit is also  allowed a  -/+ 10% tolerance factor.  


(A) When a credit is used  to pay for a revolving transaction, the word ‘revolving’ is also applied 

(B) The term “confirmed” can be applied to any any credit and that although a confirmed credit cost more  to issue it allows the supplier to collect on the instrument in most cases - immediately upon delivery being completed.

(C) The term D/P  means “Deferred Payment” E.g: D/P  “45 Days” means  the bank of the buyer accepted the presented document to authorise payment, and that such payment is able to be collected 45 days after delivery was completed. Goods are usually more expensive when D.P or ‘negotiation credit’ is used.The supplier could actually obtain funds immediately by discounting the credit, where the bank of the supplier seeks reimbursement of the whole amount. This kind of credit MUST bear a confirmation. Ideal for end buyers  looking to take delivery and sell such goods, to obtains funds to cover the cost of the money loaned to the creditworthy customer – to open  and issue the credit. 

(D) In a revolving deal, the revolving  aspect of the credit often will have a clause applied on the contract, that two (or even there shipments) payment values in advance may be apparent at times. Since shipping schedules are often late, if two shipments arrive at port of destination in a given month, the funds to pay for goods are already apparent, causing no further delays for the ship in waiting, (demurrage) to unload. A revolving credit bears the term ‘non cumulative revolving’ meaning ; “as one credit value  is taken from the top of the stack, a new credit becomes available  from the bottom.” FTNX applies its own rule and discretion on this matter, in where a loaded ships crossing one hemisphere to another; 1 payment  in advance is sought. Where port of loading and unloading is less than 6000 KM from each other, this aspect  attracts advance payments, as the chance that more then one ship arriving at destination port in a given month increase.

(E) A UCP 600 endorsed credit  marked as transferable can only be transferred once; which is an unwanted change from the previous UCP 500 rules. This is the main reason why we cannot sell goods to a third party or intermediary as the credit once transferred from the third party to FTNX cannot be transferred again to the bank of the supplier and that; the BOL can only be secured by the  person paying for goods and taking possession of such goods. An Assignment of Credit cannot be applied either at the international level, because the whole credit value has to be assigned to the supplier. 


Even though a DLC is marked at pre advised, it is still an active credit; and that  once a pre-condition  has been observed, the ‘pre advised’ status is removed to favour a full active credit. FTNX offers an in-house document ( at our discretion) called a PPI (Policy Proof of Interest) disclosing the details of our supplier. The end buyer may contact the supplier once, to confirm that FTNX has purchased or is able to purchase goods on offer, and nothing more. No mention of FTNX buy price is served. Whether the end buyer verifies the PPI or or not, the transaction apparent moves forward, with the credit becoming fully active, once the PPI is issued ( PPI is a creation of FTNX, issued not as a legal requirement but as a FTNX courtesy–at our discretion.) Small banks will need to have a Pre advised Credit  advised as Confirmed. Larger top 100 ranked banks of the world, do not need to confirm a credit. This type of  credit are popular with large corporations  as the issuance charges are low and that a corporation can use borrowed funds from its own bank ( factor or finance ) to open such a credit. The end buyer has to first confirm that their bank  is able to issue a UCP 600 ruling PA IDLC, before the offer is signed, as not all UCP ruling banks are able to open a pre advised instrument.


An active credit  is advised once more bearing a irrevocable status on issuance; meaning that ”the bank will honour” payment upon clean presentation ‘at sight,’ of the required  transport documents, as specified on the contract.  Banks cannot outright simply guarantee payment as it could do when a SLC is used because documents  have first to be produced and accepted by the bank; hence the bank will honour payments one conditional aspects of issuance and later collection have been met. Again if the IDLC is not issued by a large top 100 world ranked bank, confirmation of the credit must be sought. Once a credit is confirmed, the large bank offering the smaller bank to confirm its credit, accepts the transport documents being presented ‘at sight.’

Above are the main  payment basis accepted by FTNX.


Corporations around the world  trading with each other often apply a SLC payment aspect. However, in the reality of a general import export transaction, a Professional Commodity Trader (PCT), or end buyer MUST never pay for goods using a SLC. An instrument such as a SLC is an unconditional undertaking in where one single event can trigger payment, unlike a DLC  which bears a conditional payment mode, where payment is only released once certain conditions are met. Since an export deal can take weeks and months to close, and many verifiable document needs to be collected, the DLC simply is worthless to all involved in the transaction if the conditions written on the credit are not met. SLC can easily be claimed in where the end buyer could lose funds and receive no goods. Using a SLC to pay for imports is a high risk application. Using a “SLC to pay for late delivery” is a sound application that is advised by the supplier to FTNX  once the DLC to pay for goods has been accepted first. A DLC is collectible as per current URC rules, “within 5 banking  days” of  transport documents being presented. A SLC could be collected e.g: upon presentation of the passport. We deal in ‘future’ sales and cannot deal in on the SPOT transactions which attract SLC kind of  payments to entities known to each other. Never use a SLC to pay for goods.FTNX does not respond to such requests.


Bank Guarantees cannot be used to pay for overseas imports, as the rules supporting such vary greatly country to country; just  like using Bills of Exchange cannot be used for the same reason. Bank do not get involved in the product being sold and therefore  paying for goods by a bank guarantee is a high risk application same as using a SLC or Cash and cannot be made to bear an irrevocable status.   


Client  visits FTNX first, then SWIFT wires ( or sends Cheque via post ) let us  say  for US$ 10,000,000.00 which reverts to  cash when landing  into the account of FTNX in Australia based on a set of preconditions. E.g: the Buyer wants FTNX to source over a 6 month period, and immediately buy all E.g: Copper Cathodes  bearing a 20% discount on LME prices or better at FOB or EXW price basis plus  carriage. So FTNX sources Cooper Cathodes as required 5 months later. FTNX now buys the Copper Cathodes by converting the cash to a DLC and reverting to the usual orthodox trading aspect. These kind of request do occur but are rare and can be highly risky. The whole deal must first be closed with the end buyer all the way to a signed contract. Funds are wired into E.g: FTNX account, directly or via a third party (i.e: Law office.) FTNX sources goods. If no Copper is available at price sought, the buyer may extend the sourcing period by another 6 months or the end buyer may simply seek the return of the cash, and any interest earned, less a 3.25% administration fee. Cash payment are accountable in a country like Australia, in that; Federal Government reporting by the bank will take place once the cash lands in our account. FTNX will have to produce a document to the Government tax department to prove what the cash is for. Transparency is always apparent with this kind of transaction, which often is  simply not suitable for most PCT’s to ply. In where an investor is looking invest funds in E.g: Australia; a company is set up where FTNX isa director as well as the  agent of the disclosed principal/director as applied under a corporate umbrella and supporting laws of the state.  


Unless the buyer  pays by cash or issues their own DLC from a bank, an intermediate buyer cannot use the DLC secured from its end buyer in  a string  deal with other intermediate traders. The original DLC can only be transferred once, further more  the BOL in such dealing cannot be made to (endorsed) ‘notify a party’ which means the deal can travel along a string of many intermediaries before reaching the end buyer if the BOL remains ‘not endorsed in the blank margins’. This aspect is  a high risk application. Bank will not take as security one DLC, to issue another. Back to back deals are deals when one intermediate trader accepts a DLC in one hand, and issues another from his own account to the next intermediate trader is a business method of years gone by. 


One must never pay a deposit as  a condition of securing goods. Let us say; a supplier in India  asking a Canadian end buyer  to pay a deposit upfront is a high risk application in that; if the deposit is lost, it would be literally impossible to enforce a refund through the courts  if the supplier becomes belligerent, by not refunding the deposit.  Even if the supplier has made a mistake, more often or not a’ legal’ type of nonsensical  excuse will often be made serving reason to keep the deposit.


Our bank will not accept funds/ instruments advised by a person in  country bearing Australian or USA sanctions.There is no point arguing about this matter. Our bank in Australia will not accept to advise on deals emanating from sanctioned countries.


All offers will be dated to carry a first delivery date  landing on the 15th day of the month or before but not later ; as dictated by our long experience.This aspect ensures no issues  with matters of payments or amendments in the ‘business slow down period’ of December in any given year; on the approach to the Christian festive season of Christmas and  later New Celebrations. FTNX prefers to have the contract signed, in where first delivery date is  30 days thereafter. This will bring the aspect in line in serving the 21 day presentation period (another security feature), once the actual DLC is advised and accepted within 5 banking days thereafter. If the 21 days DLC presentation  period (Stale DLC) expires, amendments to the credit or waivers are sought ( at added bank charges) 


For container deals, intermodal transport documents are secured presented at once. In a NBC deal  the transport document are collected as they are produced. Documents that may meed to be secured by FTNX depends on the delivery mode used.Typically one set copy of transport document is required to  to be presented to the DLC issuing bank via FTNX. The kind of document to be produced include; Pre Shipment Inspection (PSI) Certifications, Ships Mates Receipt,(SMR)  Sellers Declarations Certificate (SED) Seller Invoice, Preferential or non Preferential Certificate or Origin, Bill of Lading and the likes–just to name a few. These are statutory verifiable documents that fraudulent traders will not be able to secure. When presented to the bank, the bank personnel examines the document ‘at sight’ to ensure the conform with the entries of the DLC. The PCT may seek hardcopy of the documents and present them personally to its bank, or in it may simply conduct business  electronically when  electronic document presentation is  specified on the credit ( via Bank to Bank transmission)   



Payment instruments must be advised to FTNX by the end buyer in where the aspect is specific with advice found on this site page. If a large discount on goods offered  is apparent, the end buyer pays for the transfer fee, corresponding  fee, and  confirmation fee for any DLC being advised to FTNX .This security aspect ensures that FTNX bank account receives the funds directly. If the FTNX buy price is higher than than expected, the supplier will need to pay for the transfer fee instead, to obtain the credit from FTNX bank is another security feature ensuring that the supplier is acting only with FTNX and visa versa. Where a DLC is issued as Not Transferable (at the behest of the end buyer) then  the credit MUST bear full confirmation of a suitable leading corresponding bank– or the FTNX bank, as paid by the end buyer. All prices are offered at FOB, FAS or FCA Incoterms delivery mode at first. If the end buyer  asks for CIF or CIP delivery modes, such is provided as an option on the offer, which is then formalised on the contract. DATP/DAP/EXW delivery modes cannot be used by FTNX except to create a price basis. CPT delivery modes is available for precious metals. Only the terms and conditions of the DLC apply as far as banks are concerned; dispute arising about the contract has no effect on the irrevocable aspect of the credit; only fraud can cause a bank to formally withdraw the irrevocable status of a credit causing the DLC to become both a void, useless unworkable instrument. Since such deals take time to formally closes, discovering a fraudulent act is a simple process as tested over time as the trade interaction being enacted upon, is usually measured in months. A police report is served to the bank evidencing matters of fraud.The bank  then investigates further  before making a credit revocable if claims of fraud is proven or evident. FTNX deals in safe legally safe and correctly interpreted  procedures. A DLC has no value until its conditions are first met.Even if issues arise during a delivery process; since the orthodox basis is apparent in all FTNX dealings, solving any such issues is easily applied over time, where revolving deliveries are in effect. In this light an amicable and honourable  association with the entities FTNX conducts business with, prevails at all times-–is the expectation.


All end buyers  ought to be using the safe aspects of buying goods using a ICC UCP 600 DLC to pay for goods; alas many end buyers have suffered adverse financial effects on past deals, for personally failing to observe safe trading aspects or enact on a deal without sound advice being apparent or sought. An end buyer unable to open a DLC should not  approach nor seek products from a Professional Commodity Trader such as FTNX. Having stated as much , FTNX will work  hard at all times, to ensure its clients get the best outcome.