As you know there are many “wannabe” intermediaries attempting to get big profits through international trade which is very lucrative. Over seventy-five percent will never, ever achieve pay out. How do you solve the issue? We, through our own experience, had to have a bad experience by those to learn the hard way. Where do you start learning?
We decided to start with a trading intermediary rule that you, as the intermediary, are allowed to do. Do you know that according to trade law, if you are next to the source you can represent yourself as the “Seller?” Yes, it is true. If you have a supply of HMS 1, which you know for a fact, you can represent yourself as the source of HMS 1. Did you know, if you do not know that you have a real supply of HMS 1, and if the buyer issues anything in your name, you may have problems with international law. Therefore, Mike the store clerk can offer a supply of sugar just as much as your qualified international trader on the London Exchange.
UCP: Uniform Custom Practice for Documentary Credits Publication 600. Financial instruments are letters of credit that are necessary for the consultant. To secure any type of commission from the end buyer the UPC 600 letter of credit is crucial. The rules are international procedures that govern the way letters of credit are secured and transacted upon. What this means is, that once you as the consultant secures the instrument marked with the term UCP 600 APPLIED with the final buyer then such rules take over in trading transactions in matters of securing your payment for products being bought or sold.
With true procedures, how do you know if you have a genuine goods? You don’t, if you are pushing offers over the world wide web. You have to establish a communication of trust and meet in an appropriate fashion. Here is an example: Let’s say you meet Mike who is a supplier of any source. You get to know Mike through a few skype calls. You go and meet Mike and you find out that he has a genuine supply of sugar. You tell Mike, ‘I am going to be the seller, but represent you to get paid.’ (Remember, you can do this with trade laws). Mike would like to have more buyers and prefers not to do a lot of work. He says okay.
What is the point? Once you know for a fact that you have a actual product, you can represent yourself as the holder of product, and the buyer can issue a documentary letter of credit in ‘your’ business entity. Once you have the documentary letter of credit (in your company name) you are protected from getting cut out of the deal, you can open the doors to the supply of steel, and you have a very well established relationship with the seller and the buyer. You solidified the deal in a business like fashion. In this scenario, both the buyer and seller will pay you for your business ethics.
We are going to use a DCL or documentary letter of credit as a simplified example according to UCP which we mentioned above. A DCL is a document used by financial institutions for an irrevocable payment undertaking. Most Documentary Letters of Credit are irrevocable which means the DCL’s cannot be amended or canceled without prior arrangements with the beneficiary. When you have a DCL issued by a buyer then you are guaranteed payment. It is imperative to have the DCL with the correct wording for the transaction, and if you have any doubts please consult with an international lawyer. We know there are various forms of the DCL, but we are using easiest of transactions for illustrative purposes.
You can do this with all major commodities. You are not breaking any international trade law or regulations. In fact, you are performing as international trade would like you to. There is a way for you to protect yourself in bulk commodities, and the way we have explained it is the way it is done. If anyone is asking for a BCL, ICPO, NCND, do not waste time with it. Make sure to get yourself next to the product. Then you are the supply.
Tags: building wealth, documentary credits, genuine goods, hms 1, international trader, letters of credit, london exchange, publication 600, ucp 600, what this means