I would like advice on how to deal with a particular supplier. We keep opening LCs but they expiry half utilized. Someone suggests opening revolving L/Cs. Is this practical? Moreover the supplier won't be able to send shipments for a fixed value every time. Please advice.

a) Open a letter of credit for the first shipment value for minimum 90 days validity (most banks charge LC issuance fee for min 3 months period). Once the first shipment is effected, the buyer can increase the value of the credit and extend the validity only upon getting substantial proof from the supplier that he is going to make shipment. By doing so in this way, the applicant can save bank charges.

b) As an alternative to the above - the importer can request the seller to send documents on collection basis with an approved avalised facility – this would work only in case of deferred payment terms.

Regards

Zahoor