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Guaranteed Letter of Credit

  • 10-03-2011 3:05pm
    #1
    connel42
    Registered Users, Registered Users 2 Posts: 175 ✭✭


    Hi
    We are a small firm suppliying industrial customers.
    Some of these have a very poor history of payment wit us.
    Due to these times we are lookig at ways of giving credit but that has some guarantees behind it.
    I seem to remember from years ago that "Guaranteed Letter of Credit" was used a lot during the last recession.
    Does anybody know about them and how or if they are still available?
    It would be great to offer 30 days credit knowing you are guaranteed your money at the end.

    Any help appreciated


Comments

  • #2
    91011
    Closed Accounts Posts: 1,383 ✭✭✭91011


    Its really of no use as the letter of credit funds are technically unavailable whilst the letter in valid.

    So customer has 5k overdraft and wants 10k letter of credit, - he will have to have a credit balance of 5k to get this.

    What you are looking for is invoice discounting - you "sell" your invoices for x amount and you get the balance less a fee when they are all paid.

    A final option is credit insurance, you pay insurance and if a customer goes wallop, the insurance pays out.

    The best option is to cut credit and start accepting credit card payments or at minimum 50% up front.


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