WHO WE ARE? Merchant Credit and Guarantee Corporation Limited (MCGCL) is a Non-Bank Financial Company that has been in business since 2000 handling various financial and broking services. Today the company with its principles and its team of business professionals with varied experience in Banking and Financial Services have embarked on a boutique financial consulting activity that specializes in the provision of Capital for Businesses, Trade and Financial facilitation which include but is not limited to import/export transactions that mostly involve supporting Credit facilities, financial assurances, issuing or broking in financial instruments to back up payment commitments, obligations and Purchase of Goods, most commonly of International Nature by Banks and Financial Institutions globally. MCGCL operates in a consultative capacity to bring the client within easy access of banking facilities and all the necessary paperwork and red tape that goes along with the entire process. With the rapidly developing trade base in the import and export industry, project finance and trade import and export, finance is playing a huge role in how countries are doing business with each other. The roles of financial institutions are to provide security when business is being done across country borders. Whether you need a tender guarantee to bid on a construction project or a confirmed letter of credit to buy goods from China and import them into Australia, MCGCL has the ability to arrange for the facilitation of such issuance for all these different types of commercial letters of credit and financial and or performance guarantees. MCGCL has experts on the ground in various parts of the world that represent various areas of business, heavy infrastructure and service industry and are able to guide clients in the right direction to attain their specific project goals. Today with its offices in NZ, USA, Thailand and India and correspondents in Europe and the UK, MCGCL has unique link ups with Banking and finance institutions all over the world with superior connections for the issuances of just about any kind of commercially acceptable swift transmitted trade credits as the case may be. Through honest and reliable business practices to build its good reputation, we have obtained worldwide acceptability. We can help businesses create new opportunities and revenue streams all around the world. Letter Of Credit TRADE FINANCE SBLC Proof of Funds Guarantees Documentary Collections
Letters of Credit (LoC) Letter of credit accomplish their purpose by substituting the credit of the bank/financial institution for that of the customer for the purpose of facilitating trade. In the event the buyer/importer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount on the purchase. Due to the nature of international dealings, including factors such as distance, differing laws in each country, and difficulty in knowing the parties to the contract personally, the use of letters of credit has become a very important aspect of international trade. Letters of credit used in international transactions are governed by the International Chamber of Commerce Uniforms Customs and Practice for Documentary Credits. Letters of Credit are as old as banking itself. They are based upon the fact that the creditworthiness of an unknown Buyer is thus replaced by the creditworthiness of a known Bank or financial company. MCGCL often has to stand in the shoes of its customers and give some form of undertaking that payment will be made provided certain conditions are complied with. This mechanism is called as Letter of Credit or Documentary Credit. Although there are various types of Letters of Credit, people are most likely to be familiar with the terms Import or Export Letter of Credit. When a Buyer applies for an Import Letter of Credit it specifies the Exporter, the amount, the Currency, the maturity date, the nature of goods, as well as any other payment terms. The Exporter in his country is then advised that a Letter of Credit has been opened in his favour, therefore he is the beneficiary of an Export Letter of Credit. Therein, the Exporter ships the goods to the Importer and presents all the required documents to the bank. The bank checks the documents for complying with the Letter of Credit and makes payments to the Exporter. At the end, the bank claims settlement from the Importer. 1 - Sale Contract 5 - Shipment Exporter 6 - Presentation of Documents 4 - Advising Letter of Credit 8 - Document Release 2 - LC Application Importer 3 - Issuing Letter of Credit 8 - document control, payment release at maturity Issuing Bank 7 - Presentation of documents to issuing bank Advising Bank
Bank Guarantees What Is A Bank Guarantee? A Bank Guarantee involves a financial institution providing a guarantee that a debt will not go unpaid. This kind of transaction gives the person or institution a safety net should the debtor be unable to make good on his borrowed money. If this situation does occur, the bank that provided the Bank Guarantee is responsible for the balance owed. Bank Guarantees can provide the necessary references to obtain a loan for goods or services. By procuring this type of instrument, a business will be able to purchase the needed capital to start or maintain their services to others. Since a bank is backing the customer, the institution providing the loan has no reason to find the customer unworthy of a loan. Whether the customer follows through or not, the loan will still be paid back without any hassle or interference of collections agencies. MCGCL is often asked to assist in obtaining in the provision of Guarantees or Bonds on behalf of its customers, who may be importers or exporters, traders, middlemen or possibly contractors who have to give some form of undertaking to their counter-parties. The Guarantee is a written undertaking from a bank that if a customer does not honour an obligation to perform a particular function or service, the bank will pay over a sum of money on behalf of that customer to a named party. Do You Need A Bank Guarantee? The answer to this question is found in the answer to a few other questions, such as: Would you profit from transactions that you fear might not work out were you to become involved? Could you provide your services more freely and more widely if the risk of the other party not following through were lower? Simply put, a Bank Guarantee takes the fear out of stepping out on a ledge. If you know there is a safety net, you can feel free to not only walk, but do cartwheels. Think of how vast your connections and services could be if you just had a little bit of a safety net. That s what a bank guarantee can do for your business. Performance Guarantees A performance guarantee is a promise made that either a service lives up to certain expectations, or that a product will continue to perform well over a stated time period. In the business world, there are many such guarantees, each created in individual ways to define the company's commitment and extent of future responsibility. Sometimes, third parties guarantee performance of something too, especially when employing subcontractors. For consumers, the guarantee might sound something like the following: We guarantee if you use our exterminator service, you won t have any more cockroaches or we ll come back to fix the problem for free. This is not just an assurance of quality in the initial service, but an assurance of quality in the near future. To save money, the exterminators might also specify a time period during which they'll provide the service, or they might be guaranteeing free service forever, with each new roach encroachment. The goal, though, is to make the customer choose the services of a business because that business promises to stand by its work. Other guarantees are possible. For example, there are many private schools that guarantee that students can finish an undergraduate degree in four years, and if they don t, they get a fifth year free. This offer can look pretty good when state schools are cutting budgets and classes dramatically, and might make a student lean toward private education, even though it s more expensive. Occasionally, there are agreements where a third party subcontractor is used, but the subcontractor isn t monetarily liable if performance isn t up to par. Instead, some other business may guarantee the performance and have to pay fees or fines if it isn t satisfactory. Governments occasionally license businesses to do certain types of work, like improving energy efficiency in buildings. The company that invests in such work would not go back to the subcontractor if the work hadn t improved energy efficiency. Instead, it would go straight to the government for recompense.
Standby Letters of Credit - SBLC DEFINITION of 'Standby Letter of Credit - SBLC A guarantee of payment issued by a bank on behalf of a client that is used as "payment of last resort" should the client fail to fulfil a contractual commitment with a third party. Standby letters of credit are created as a sign of good faith in business transactions, and are proof of a buyer's credit quality and repayment abilities. The bank issuing the SLOC will perform brief underwriting duties to ensure the credit quality of the party seeking the letter of credit, then send notification to the bank of the party requesting the letter of credit (typically a seller or creditor). Also known as a "non-performing letter of credit". A standby letter of credit will typically be in force for about one year, allowing for enough time for payment to be made through standard contractual guidelines. Standby letters of credit are often used in international trade transactions, such as the purchase of goods from another country. The seller will ask for a standby letter of credit, which can be cashed on demand if the buyer fails to make payment by the date specified in the contract. The cost to obtain a standby letter of credit is typically 4-15% of the face amount annually, but the letter can be canceled as soon as the terms of the contract have been met by the purchaser or borrower. A Standby Letter of Credit or Guarantee is a written undertaking given by an Institution to the person with whom you are doing business (beneficiary) to pay a specified amount of money in the event that you or a third party do not meet specific financial or performance obligations. Upon MCGCL's payment to the beneficiary, you reimburse MCGCL for such payment. MCGCL has expertise in structuring Standby Letters of Credit or Guarantees to meet your business needs while helping to protect your interests to the extent possible in the circumstances. MCGCL has developed numerous Standby Letter of Credit or Guarantee proformas to meet a variety of scenarios; we can customize any of our formats to suit your needs, subject to certain requirements. Our trade finance experts provide you with structuring, mitigation and financing expertise and up-to-date country and trade risk guidance to support and expedite your trade transactions 1 - Sale Contract 5 - Goods Delivery Seller Buyer 2 -SBLC Opening Request 4 - SBLC Advising & Confirming 3 - Issuing SBLC Issuing Bank Advising & Confirming Bank
Documentary Collections International trade procedure in which a bank in the importer's country acts on behalf of an exporter for collecting and remitting payment for a shipment. The exporter presents the shipping and collection documents to his or her bank (in own country) which sends them to its correspondent bank in the importer's country. The foreign bank (called the presenting bank) hands over shipping and title documents (required for taking delivery of the shipment) to the importer in exchange for cash payment (in case of 'documents against payment' instructions) or a firm commitment to pay on a fixed date (in case of 'documents against acceptance' instructions). The banks involved in the transaction act only in a fiduciary capacity to collect the payment but (unlike in documentary credit) make no guaranties. They are liable only for correctly carrying out the exporter's collection instructions and may, if so instructed, sue the non-paying or non-accepting importer on the exporter's behalf MCGCL also facilitates international trade transactions by providing a documentary collection facility. Under this arrangement, the supplier knows that the shipping documents will be released to the buyer against payment (DP) or acceptance (DA) of draft, based on their payment agreement. Documentary collections are of two types:- Document against payment (DP) - Sight Documents - Document against acceptance (DA) - Term Documents Under this service shipping documents are sent to us by the Seller s bank to be delivered to the Buyer as per their instructions. The Seller is assured that documents are delivered to the Buyer against payment (DP documents)/ or acceptance to pay on due date (DA document) as per their terms of payment. The Buyer is able to get the goods without making any payment until the goods are shipped by the Seller and the shipping documents are received at our end. The Buyer gets delivery of the documents as per the agreed payment terms. DA terms enable the Buyer to get credit from the supplier. Shipment of Goods 2 Shipment of Goods 2 and collection order 4 Remitting Bank 7 Collecting Bank 8 Payment Documents against acceptance 3 1 Sale Contract 6 and collection order 4 Remitting Bank Collecting Bank 7 Payment Documents against payment Export Documentary Collections In today's international credit markets, exporters often need to use their financial resources or bank relationships to affect a trade sale. Buyers in Latin America, Africa, Eastern Europe, Asia and the Middle East may be unable to obtain international credit on their own. For commercial trade transactions, our Export Documentary Collections offer exporters an alternative payment method to letters of credit. When you ship goods to an importer, MCGCL retains custody of the title documents, until payment is received or expectance is obtained from the importer. Payment 5 Documents Payment 8 Importer and collection order 5 Documents 6 Payment Credit 3 Exporter 1 Sale Contract Trade acceptance Payment Credit 9 Importer and collection order Exporter
From wherever they originate, transaction proceeds are remitted to your account within 24 hours of receipt, giving you access to your funds at the earliest possible moment. Export Documentary Collections also let you: - Centralize the management of export receivables - Track outstanding collections - Know when payments are made - Improve the reconcilement and administration of your export processing Unlike with letters of credit, the bank does not cover credit and country risk. If you re comfortable assuming those risks, Export Documentary Collection maybe a cost-effective option. You can generate Export Documentary Collections electronically, using MCGCL to transmit transaction details directly to us from your office. You can also denominate these transactions in a variety of currencies. How Export Documentary Collections Work? An Export Documentary Collection is a method of payment by which an exporter can collect payment from an importer through an intermediary bank, which facilitates the flow of title documents and payment. The exporter s bank solicits a payment, on the exporter s behalf from an importer by sending title documents and a cover letter to the importer s bank. The importer s bank advises the importer of the bill. When the importer pays the bill, the importer s bank pays the exporter s bank. When the exporter s bank receives payment, it promptly credits those funds to the exporter. Proof of Funds Documents DEFINITION of 'Proof Of Funds - POF A document that demonstrates that a person has the ability and funds available to use for a business transaction. It usually comes in the form of a bank, security or custody statement. The purpose of the document is to ensure that the funds required for the transaction are obtainable and legitimate. MCGCL can provide many products and services to assist you in your financial needs. We are a trusted Proof of Funds facilitator that has been relied on for several decades by many thriving businesses in the financial industry. Let us use our experience to help you! Our services incorporate a variety of needs, and include the following: - Cash Management - including Collection Services, Disbursement Services and International Payments. - Trade Financing - SBLC's, LC's and Bank Guarantees - Financial Guarantees - A simple application starts the process - SWIFT Services - Safely and securely completing your transactions All of our products are securely cash backed and can be used for any of your proof of funds needs. Should your transactions require cash collateral, credit enhancement, balance sheet enhancement, or more, MCGCL can be your solution. Time Draft What is a 'Time Draft? A time draft is a form of payment that is guaranteed by an issuing bank, but is not payable in full until a specified amount of time after it is received and accepted. Time drafts are a type of short-term credit used for financing transactions of goods in international trade. They allow the buyer a delay in payment after accepting a shipment of exported goods. A time draft contrasts with a sight draft, which requires immediate payment. The purpose of time drafts is to facilitate international trade. When an exporter receives an order from an unknown importer (or with which it has little credit history) in another country, the importer can apply for a banker's acceptance, which substitutes the bank's credit for the importer's credit. The time draft is post-dated so that payment does not occur until a specified date in order to allow the importer time to receive its ordered goods and confirm satisfaction. After the issuance of the banker's acceptance, the exporter now possesses a promise of payment from the financial institution. It can hold this asset until maturity and be paid in full, or sell it before maturity at a discount to obtain earlier access to the funds. The time between acceptance and maturity is called "tenor" or "usance." As such, time drafts may be referred to as "usance drafts."
Advantages To The Seller - Credit risk eliminated Reduces exchange rate and political risk No Need for Credit Check Requirements to pay are well-known Pre-shipment risk avoided Facilitates financing Immediate payment Advantages To The Buyer - Expert Examination of Documents Sources of Supply expand Financing No cash tied up Payment only after compliance Our Bankers Commerzbank Societe Generale Deutsche Bank Bank Winters Credit Agricole Unibanque Axios Credit Bank Bank Leumi USA Israel Discount Bank of NYK Citibank USA Wells Fargo Bank, NYK Bank of Baroda Habib AG Zurich DBS Bank OCBC Bank Account Opening Process To initiate the letter of Credit Relationship, we must be in the receipt of the following: - Master Facility Agreement (signed, stamped, and notarized with Applicant s company seal) - Application for Trade Finance Facility (signed, stamped, and notarized with Applicant s company seal) - Certificate of Incorporation - Passport Copy of the Majority Shareholder(s) of the Applicant s company (If the applicant is located within United States: Driver License or State Photo ID) - Copy of recent utilities bill with Applicant company address To hear more about Trade Finance and our complete services, contact us at sales@merchantcreditcorp.co Or visit us on our website at MERCHANT CREDIT AND GUARANTEE CORPORATION LIMITED 123 Manukau Road, UNIT No. 3, EPSOM, Auckland 1023, New Zealand MERCHANT TRADE AND GUARANTEE CORPORATION LIMITED 61 SOI 41, Pattanakarn Road, Sualuang, Bangkok, Thailand MERCHANT CREDIT AND GUARANTEE CORPORATION LIMITED Gopal Mansion, A-57, 2nd Floor, Turner Road, Bandra Talao, Bandra West, Mumbai - 400050, India