Back to back letters of credit

 

What is a back to back credit?

It`s more of an arrangement than a type of letter of credit. It's where an exporter or seller will receive a letter of credit in their favour & wants to use the security of the credit as collateral to issue another credit to the ultimate supplier.  The two credits are entirely independent of each other.

Banks are increasingly reluctant to provide facilities to support this type of trade. Under normal lending criteria they will require additional security. It is an area that bank`s often feel uncomfortable and they deem it has high risk.

Back to back credits are ideal for

  • businesses that are buying goods from one place and selling them on to another. In other words trading companies.
  • companies that are struggling to raise the necessary finance to complete their export transaction, or where a transferrable L/C just won’t work.
  • intermediaries/middlemen who wish to hide the identity of the actual supplier or manufacturer

What can Synergy do?

Synergy are more concerned with the trade transaction itself, rather than the financial standing of the seller, (being the beneficiary under the export letter of credit). Synergy will issue letters of credit to the supplier for businesses who may not be able to obtain credit facilities with their own bank. Or for companies who do not want to tie up their existing credit facilities which could be used for other specific transactions.

Synergy is willing to offer back to back credit facilities to the exporter or middleman receiving a letter of credit in their favour. 

Synergy's back to back credit service

We have many years of experience in the successful completion of back to back credits & have credit facilities with a number of banks enabling us to issue the credit to the supplier using our own judgement & expertise. We are not a broker & will be issuing the credit in the best way in order to minimise any risk & to protect all parties involved in the transaction.

  • we will examine the terms and conditions of the export L/C & evaluate the creditworthiness of the issuing bank under the master L/C. 
  • we're interested in the product, its quality & it’s use and will investigate the standing of the ultimate supplier
  • we will take an assignment of proceeds under the lead export credit
  • we  issue a L/C to the supplier using our own facility. This L/C will reflect the contract terms between the ultimate supplier & our client & will be entirely independant of the master L/C.   
  • we will organise the logistics and produce the required shipping documents under the lead L/C
  • we will present the shipping documents to the bank for payment & will be reimbursed from the sale proceeds with the balance being paid to the beneficiary

Synergy’s back to back facility is a complete & comprehensive service, and Synergy will project manage the entire transaction.

Our back to back credit service is innovative & our expert team can evaluate the transaction very quickly, and offer guidance and support to ensure successful completion of the trade transaction

We are able to respond very swiftly to requests for facilities. We have years of experience in this field & are able to make quick decisions.

Back to back credits are our business.