Five Reasons Why You Should Choose Cash-backed SBLC

Before we delve into the benefits of the Standby Letter of Credit (SBLC), it is important that we understand why banks need to issue SBLC. While most banks never issue SBLC until it is the last resort when their client has failed to make the payment that was due to them. SBLC is often considered as a safety mechanism for the buyer and helps in reducing risks associated with the business. Cash backed SBLC is a letter of credit that aims at minimizing the risk, optimizing the profits and maximizing control when a person or association enters into business in an international market. The guarantee provided with the SBLC helps make transactions simpler, smoother and safer for all parties associated with the trade. The banks in Dubai require a pledge of cash as collateral.

Protect the Seller

One of the biggest benefits of SBLC is that it protects the seller from all the risks associated with the non-payment of dues. For example, if the buyer needs to make them within 30 days of delivery, and they fail due to any reason, the seller can easily use the SBLC to get payment from the buyer’s bank.

Uniformity of Production Order

The other benefit of SBLC is that it protects the seller from last-minute changes made by the buyer. Under the contract, the buyer is bound, and they cannot make any changes or cancellations of the production order.

International Trade

When you sign an SBLC it offers you an opportunity to enter into business with companies in the international market, that could help you in improving your financial position in the market as well as among your peers.

Small Businesses

If you belong to the SMEs sector, then signing an SBLC will not help you protect your position in the market, but also keep you at par with the known competitors. An SBLC adds to your credibility and opens doors for you when you are applying for a high-end bidding project and helps avoid an upfront payment.

Original Documents

When you sign an SBLC, the parties involved in the process use the original documents for issuing the letter and the process begins with the need of the SBLC and ends only when the products are delivered at the port. This not only safeguards your interest, but also offers better inspection of the goods and enhanced quality control, and set production as well as the delivery date and time.

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