Letter of Credit Consultancy

PART 1: Straight‑Talk Guide—How LCs Really Work

1. The Building Blocks

A letter of credit (LC) is a bank’s promise—triggered by documents—that a seller gets paid even if the buyer stalls. The bank substitutes its balance sheet for the buyer’s. That promise only kicks in when paperwork lines up with the LC wording. Miss a comma: payment can freeze.

• Standby LC (SBLC)  – Safety net. Bank pays only if the buyer defaults.
• Documentary LC (DLC)  – Standard trade instrument. Payment flows once correct docs hit the counter.
• Usance LC  – Deferred payment. Bank pays at sight then gets repaid later, stretching buyer terms.

2. Common Pain Points

• Toxic Clauses – “On first demand without protest” in an SBLC can blow a hole in collateral ratios.
• Missing UCP 600 References – Outside standard rules, disputes drag through court not the ICC framework.
• Collateral Over‑Pledge – Multiple banks holding the same stock or receivable; release fights choke cash.
• Country‑Specific Sanctions Traps – One sanctioned port call and payment freezes.
• Doc Presentation Ambiguity – Courier delays and unclear electronic presentation rules create silent refusals.

3. Smart Structuring Tactics

• Back‑to‑Back LCs – Mirror a master LC to upstream suppliers without posting extra collateral.
• Transferable LCs – Flow rights to another beneficiary while keeping your margin invisible.
• Red Clause / Green Clause – Unlock partial advance funding against warehouse or port docs.
• Silent Confirmation – Add a confirming bank when the issuing bank’s rating spooks sellers.

4. Lifecycle at a Glance

• Mandate & Term Sheet – Agree face value, expiry, incoterms, issuing bank list, collateral.
• Draft Wording & Ping‑Pong – Our legal and trade teams slug it out with counterparties until every clause is watertight.
• Issuance & Swift MT700/760 – We chase the bank ops desk—no “lost in processing” black holes.
• Shipment & Doc Prep – Check docs against the LC before they head to the bank; avoid day‑zero discrepancies.
• Drawdown / Settlement – Track bank turnaround. Flag silent refusals early. Keep cash moving.
• Expiry & Collateral Release – Push banks to lift holds, file UCC terminations, and free capacity.

5. When an LC Beats Open‑Account Terms

Tight political risk, brand‑new counterparties, or orders bigger than the buyer’s balance sheet—these scream for bank support. An LC shifts performance risk to a regulated institution, letting the deal fund without killing working capital.

PART 2: Why Financely Group Is the Crew You Want in Your Corner

Zero‑Drama LC Execution

We scrap red tape so cargo ships and production lines keep rolling. Our phone sits on speed‑dial with major trade desks in New York, London, Dubai, and Singapore—meaning wording tweaks and Swift releases happen today , not “next cycle”.

What We Handle

• LC Strategy & Structuring – Face value, tenor, collateral, confirming bank choices.
• Wording & Legal Cover – Clause‑by‑clause defence so nobody exploits a loophole.
• Bank Shopping & Credit Lines – Tap global and regional banks; push for lower advance margins.
• Collateral & Refinancing – Replace cash with SBLCs, roll maturing LCs, arrange bridge capital against the LC or underlying goods.
• Doc Preparation & Compliance – UCP 600, ISBP 745, ISP 98—our trade ops team lives in that rulebook.
• Discrepancy Fights & Drawdown Support – We stand between you and the bank when things get spicy.

Proof in Numbers

• USD 1.2 billion LC volume secured for clients over the last 24 months.
• Average doc‑turnaround: 36 hours vs industry 72+.
• LC approval rate: 91% on first wording submission.

Indicative Fee Grid

Package	Upfront (USD)	Best For	Includes	Typical Timeline*
Quick‑Strike Review	5 000	One LC draft under USD 5 m	Wording mark‑up, risk memo, bank call‑ins	3‑5 business days
Full‑Cycle LC Issue	25 000 +	Fresh SBLC/DLC up to USD 50 m	Structuring, bank line, wording, doc prep, drawdown	2‑4 weeks
Trade Finance Desk‑Outsource	Retainer from 8 000/month	Rolling LC pipeline, global trades	Dedicated ops team, 24/7 doc checks, yearly facility renewals	Ongoing

Variable & Success Fees

• Arrangement Fee  – 0.75% – 1.5% of LC face value (size, tenor and collateral drive scale).
• Bridge Capital Placement  – 2% – 3% of funding raised.
• Discrepancy Defence  – Hourly or capped; waived on retainers.
• Bank Swift Out‑of‑Hours  – Pass‑through fees only.

Quick FAQ

Do you issue LCs yourselves?

No. We arrange through licensed banks and credit insurers. Our role: structure, negotiate and push paperwork across the line.

Can an LC free my cash?

Yes—if collateral is structured right. Cash margins drop when your balance sheet and trade pattern check out. We fight for that drop.

What if the issuing bank is offshore and the seller won’t trust it?

Add confirmation from a top‑tier bank. We already have relationships in place and know the sticker price.

Can you refinance an existing LC that’s about to expire?

We roll lines with standby renewals or arrange bridge capital while a new LC is issued—no shipment stuck at port.

Financely Group is a trade‑finance advisory. We are not a deposit‑taking bank and do not hold client funds unless a regulated partner acts as custodian. Letters of credit are credit products issued by licensed institutions and remain subject to their final approval, collateral requirements and compliance checks. UCP 600, ISP 98, local banking rules and sanctions laws apply. Fees and timelines shown here are indicative and subject to mandate terms, credit profile and jurisdiction. Always seek independent legal, tax and accounting advice before committing.