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Exporting & Importing Goods/Goods Transaction Advice needed..


We have a Buyer that wishes to make cash deposit into our account for product, only under the conditions that we return the funds if he does not receive his product. In order to get the product he is requesting, we need to issue a DLC to the manufacture.

My question.. What mechanism can be used to protect his concern and still allow me to use the funds in account as collateral to issue a 30 day DLC?

If I give him a Bank Guarantee and use the funds as collateral, then I cannot use the funds to collateralize the DLC needed to send to the manufacture unless I block funds equal to his deposit... This does not make sense.

There must be a mechanism to give him peace of mind that funds will be returned if we cannot secure product, together allowing me to use the deposited funds as collateral to issue a DLC to the Manufacture so they will release product.  (The Buyer wants to make Cash Deposit instead of Bank LC that is transferable)

Any suggestions?

Hi Mike,

It's entirely up to your bank on whether or not they require collateral for a letter of guarantee. If your bank requires it, you'll either have to convince your bank to forgo the collateral or find another bank that is. Barring that, you'll have to set those funds aside until your customer receives the goods or the expiry of the Guarantee.

Best of Luck

Exporting & Importing Goods

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Richard Barr


My professional expertise is International Banking, concentrating on the areas of Money Transfers/Payment Systems and Int`l Trade Finance. Due to the high amount of travel my job requires, I am competent to give information concerning "Business Travel" as well.


I have over 18 years of combined Banking/Trade Finance experience. Spreading over 4 continents. Having spent 5 years at Wells Fargo Bank provided me with a solid background in banking. After that, I moved to Israel and worked in Import/Export for 3 Years. Followed by another year as the resident expert in trade finance for the Jerusalem region of a medium sized bank. Capitalizing on my proficiency, I moved into the high-tech world where I remain today as a Business Analyst/Project Manager/Consultant for Payment Systems and Operations Risk.

Certificate in Speech Communications, AA in General Business. Both from Mission College, Santa Clara - California. BS in Int''l Business/Bus. Admin. From San Jose State University, San Jose - California

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