Due to the upcoming Holidays, our office will be closing Thursday, December 23 at 1pm and closed on Friday, December 24 in observance of Christmas. We also will be closing on Thursday, December 30 at 1pm and closed on Friday, December 31 in observance ofNew Years Day.
Please contact your account officer to plan accordingly during this time frame.
We greatly appreciate your understanding and apologize for any inconvenience
Express recently cooked up a $2mm A/R and a $500k P.O Funding Facility for a chili spice company. The company’s sales caught fire with significant increased orders from its large retailers and they couldn’t keep up with the demand. Express’s well-seasoned team spiced things up with working capital to pay their copacker and purchase raw materials, ingredients and packaging.
Like many food and beverage companies, the client was originally looking for VC or PE firms to provide capital for order fulfillment and basic working capital requirements. The client did a hot take when they realized that they could use factoring and PO funding facilities to finance their growth AND increase their enterprise value without giving up equity in the meantime. All in all, it was another tasty adventure.
What are everyone’s thoughts on when companies should seek equity investors?
We are pleased to announce that effective immediately, David Estrakh has been promoted to EVP. Over the last few years, David has already taken on and performed the duties of EVP and his new title is intended to convey a role commensurate with those responsibilities.
As EVP, David heads ETC’s Sales and Marketing Department, overseeing a team of eight new business and marketing executives across the country. David is a member of ETC’s Executive Committee and active in all areas of operations and management including client and partner relations. As a corollary to his role as EVP, David sits on multiple company boards and is active in various charitable organizations.
In addition to his 10+ years’ experience and success at Express Trade Capital, David was recently awarded 40 Under 40 honors by SFNet (2020) and Insight Success Magazine (2021).
Every year, trade transactions exceeding US$2 trillion are conducted under UCP600, totaling some 11% of all import/export transactions.1 The primary goal of the UCP600 is to ease cross-border trade by providing global uniform rules regulating the issuance and usage of letters of credit (“LCs”).
To date, the UCP (“Uniform Customs and Practice for Documentary Credits”) rules are adopted in 175 countries. UCP rules are issued by the International Chamber of Commerce’s (ICC) commission on Banking Technique and Practice. It is important to note that the ICC is a private international organization of industry experts, not a governmental body. The UCP600 is arguably the most widely accepted set of private rules for international trade ever developed.
How is UCP600 different from previous UCP publications?
Since the UCP was first established in 1933, it underwent several revisions, each reflecting the evolution of trade finance practices across banking, insurance, and transport industries. The objective was to create a set of internationally uniform rules to remove confusion caused by individual countries promoting disparate laws and practices governing the use of letters of credit. By guiding banks and other players engaged in global trade, the UCP enables greater trust between multinational actors and drastically increases the reliability, frequency and efficiency of international trade transactions. As of today, the UCP600 is the latest published revision issued on July 1, 2007 and includes 39 Articles.
In contrast to previous UCP publications, UCP600 not only lays out guidelines, but also includes definitions (Article 2) and interpretations (Article 3) on how to apply certain provisions of the code. By providing clear, defined terms and information specifying the role of banks in letters of credit, UCP600 removes ambiguity and provides a more concise and precise set of regulations to govern LCs. As a result, compared to transactions governed by previous versions of the UCP, transactions conducted under UCP600 are more streamlined, less risky and require fewer amendments.
Aiming to adapt the evolving practice of submitting electronic documents under letters of credit, UCP600 introduced the eUCP which has 12 articles. The goal of the eUCP is to ‘accommodate presentation of electronic records alone or in combination with paper documents’.2 However, for a letter of credit to be subject to eUCP, it must explicitly indicate so in the instrument. Letters of credit subject to eUCP are also subject to UCP600 even if this is not explicitly stated in the letter of credit. If there is a conflict, eUCP will prevail in situations where it will produce a different result from UCP.
How is UCP600 beneficial for trade transactions?
1. UCP600 levels the playing field by creating one set of operating rules for all international parties. This makes trade more inclusive because it allows SMEs to participate in international markets and integrate global supply chains. SMEs can now rely on banks and counterparties to follow the UCP600 rather than relying on their network, market position, banking relationships and ability to exercise legal muscle, to hold sway over their trade partners when disputes arise.
2. UCP600 resolves disagreements without court intervention, providing more fair, cost-effective, and efficient global trade transactions. Banks and other LC issuing institutions can perform better as neutral third parties to decide issues that are resolved by the language of UCP600 rather than deferring and referring issues for resolution to courts for fear of incurring liability.
3. UCP600 clearly identifies the roles of parties involved and their responsibilities, reducing risk and increasing transparency and therefore speed for exporters and importers who otherwise would have no recourse beyond suing their trade partners and corresponding banks in courts of foreign jurisdiction.
4. A notable feature of UCP600 is the irrevocable nature of the letter of credit. An irrevocable letter of credit cannot be revoked by the issuing bank or at the request of the letter of credit applicant. It assures the parties involved that the guarantee offered by an LC cannot be rescinded once issued unless all parties mutually agree to cancel it. An LC is irrevocable by default, even if not explicitly stated.
For a letter of credit to adhere to UCP600, it must specify so (unless it states that it is subject to the eUCP in which case, both apply). This ensures that all parties involved understand how their performance under the instrument will be governed. If a transaction requires, certain parts of the UCP600 can be omitted but such exceptions must be specifically and unambiguously written into the LC.
If you would like to find out more about LCs, the UCP600 and how it could benefit your trade transactions, reach out to firstname.lastname@example.org. A comprehensive understanding of UCP600 will help both small and large businesses mitigate risks and conquer new international markets.
To make sure your LCs are issued under UCP600, reach out to us. We issue LCs, SBLCs, BGs, RWAs, and Proof of Funds. Contact us to understand which instrument is best suited for your business needs.
1. Collyer, Gary. Guide to Documentary Credits. The London Institute of Banking & Finance, 2017
2. International Chamber of Commerce. Supplement to the Uniform Customs and Practices for Documentary Credits for Electronic Presentations (eUCP), 2007
International Chamber of Commerce. Uniform Customs and Practices for Documentary Credits, Publication 600 (UCP600), 2007
Effective January 13, 2021, the CBP has issued a Withhold Release Order (WRO) that all U.S. ports of entry, U.S. Customs and Border Protection (CBP) will detain cotton products and tomato products produced in China’s Xinjian Uygur Autonomous Region. The WRO will detain the following products from China’s Xinjian Uygur: Apparel, textiles, tomato seeds, canned tomatoes, tomato sauce, and other goods made with cotton and tomatoes.
The CBP will begin detaining shipments that “exploit forced labor laws at any point in their supply chain, including the production or harvesting of the raw material”. The agency identified the following forced labor indicators through the course of its investigation: debt bondage, restriction of movement, isolation, intimidation and threats, withholding of wages, and abusive living and working conditions.
COVID-19 has disrupted nearly every part of our lives. Yes, the public health consequences are tragic. But along with this, small and large businesses alike are feeling significant economic pain. Companies in the consumer goods industry are encounteringsignificant supply chain challenges and quickly shifting consumer spending habits. The retail and the apparelapparel industry in particular are facing their own share of supply chain challenges. The list goes on and on.
During times of such economic upheaval and uncertainty, normalcy disappears, once reliable customersstart canceling orders and ask for extended payment terms. Stores suddenly closeand it’s unclear whether they will ever open again. Shipping delays become more common and trading partners less flexible.
In this climate, all businesses need to reduce their risk to survive this economic storm. One way to do this is to leverage financial instruments like letters of credit (LCs), which can help achieve the highest risk-adjusted returns.
How Letters of Credit Can Benefit Your Business
Letters of credit offer businesses substantial advantages that are amplified by the uncertainty caused by COVID-19.
Supply chain risks and cancelled orders are a greater risk in this global pandemic, so letters of credit can give you more confidence that you’ll actually get paid.
Most prominently, letters of credit minimize risk for both buyers and sellers. Buyers are that their goods are shipped and documentation is in order before submitting payment. Sellers get the confidence they need to ship goods to their buyers.
Letters of credit are also helpful because they free up capital for both buyers and sellers. By using an LC, buyers do not need to leave deposits to start production. Instead, the LC is opened for the transaction’s full value, letting buyers more efficiently allocate their capital. Suppliers can then borrow against their letter of credit, which can provide them with more liquidity before the transaction closes. It is a win-win for both buyers and suppliers.
Buyers and sellers may be transacting with new parties or others they may not fully trust, letters of credit can include provisions that must be satisfied before the transaction is completed. This can include everything from inspection of the delivered goods to specific delivery times. These provisions can ensure that your goods arrive in the precise manner that you expect – if they don’t, you have the option to reject the goods without payment or to seek a discount for the suppliers errors-
Helping Business Go Forward
It’s unclear when the COVID-19 crisis will end. In the meantime, business has become inherently riskier. There’s a greater chance that your suppliers and customers won’t pay for your goods and services. Because of this, letters of credit can help you continue business as usual while minimizing risk and preserving cash flow. For these reasons, we encourage you to leverage LCs when possible throughout this global pandemic.
AtExpress Trade Capital, we are happy to help you leverage all the thebenefits of letters of credit. anks require you to jump through several hoops (like collateral requirements or a prior credit relationship with the bank) to obtain a letter of credit. At Express Trade Capital, we have removed these restrictions by allowing clients to use our already existing LC facilities with out banks, thereby allowing you to quickly obtain LCs for your specific business needs without onboarding to a bank.
To learn more about how we can help you, don’t hesitate to click here.
In response to the difficulties facing American businesses due to the COVID-19 pandemic and associated control measures, Customs and Border Protection is contemplating granting relief to importers. In consideration of requests from the National Customs Brokers and Forwarders Association Customs Committee, chaired by GEODIS’ SVP of Trade Services and Government Relations Mary Jo Muoio, along with other industry group requests, CBP is looking at ways to provide flexibility to and extensions for a wide variety of deadlines importers face with customs obligations.
Specifically, CBP is considering granting a ninety-day extension of duty payments. At this time CBP is working to understand authorities and mechanisms which may allow this and specifics are not available. In the meantime, CBP is reviewing extraordinary requests on a case-by-case basis. As of today, lacking specific individual permissions, duty and related obligations remain in place. We expect more information in the near future and will alert our clients as soon as known. If you would like to seek temporary duty-payment relief from CBP, please contact us immediately. Initially, this relief would be for importers having duty payments due in the next week; if broader CBP issued extensions are not granted, we will pursue additional case-by-case requests.
If you have questions about your duty payments, bond obligations or challenges meeting other CBP commitments, contact your account representative at Express Trade Capital, Inc.