The company is preparing to develop entrepot trade business and is confused about the choice of letter of credit due to lack of experience. It asks about the types of letters of credit applicable to entrepot trade and the factors to be considered. The best answer points out that back-to-back letters of credit and transferable letters of credit are more commonly used, introduces the meanings of both, and mentions that factors such as the degree of trust between trading parties, the time of cargo delivery, and risk bearing should be considered when choosing, providing practical advice.
How to deal with the termination of entrepot trade? Come and get some tips!
Resolved
Our company's entrepot trade has recently been terminated, and we haven't encountered this situation before, so we don't know how to handle the subsequent matters. It involves issues concerning goods, funds, and contracts, and we are worried that improper handling will lead to a series of troubles. What should be done if the goods are still in transit? How should the already paid amounts be settled? How should contracts with upstream and downstream customers be terminated? Can any professionals help answer these questions and provide specific measures to properly handle related matters after the termination of entrepot trade?
Trade Expert Insights Answers
After the termination of entrepot trade, the goods should be properly disposed of first. If the goods are in transit, timely communication with the freight forwarder and shipping company is required to see if the destination can be changed, transshipment or return can be arranged, and losses can be minimized. Regarding funds, the paid amounts should be negotiated with the cooperating party for refunds based on contract terms and actual situations. If the trade is terminated due to the other party's reasons, reasonable compensation can be sought. Contract termination must be strictly executed according to the termination clauses stipulated in the contract, and upstream and downstream customers should be notified in writing, clearly stating the reasons and time of trade termination, and retaining relevant evidence. At the same time, financial and tax cleanup should be done to ensure clear accounts and handle tax declarations in accordance with laws and regulations. If necessary, consult professional trade advisors or lawyers to safeguard the company's legal rights and interests.
Check if there are any force majeure or special termination clauses in the contract. If the situation meets the relevant conditions, handle it according to the clauses. Communicate friendly with customers, strive for a mutually acceptable solution, and maintain good cooperative relations.
Organize relevant documents and materials, such as contracts, shipping documents, payment records, etc., to provide evidence for possible disputes. Actively negotiate with all parties, and introduce a third-party mediation agency if necessary.
For unfulfilled orders, evaluate the value of remaining goods and see if they can be sold through other channels. Calculate the incurred expenses and losses, and clarify the responsibility.
Communicate with the bank on fund processing issues to ensure that fund flows are compliant. Pay attention to whether it will affect the company's credit and take timely measures to maintain the company's reputation.
Review the reasons for the termination of this entrepot trade, summarize the experience and lessons learned, provide reference for future business, and improve the trade risk prevention mechanism.
If insurance is involved, check the insurance terms to see if corresponding claims can be obtained and losses reduced.
Communicate with the customs to understand the procedures for returning or reselling goods, ensure that the operations are legal and compliant, and avoid additional costs.
Coordinate with the warehousing party on the storage of goods. If extended warehousing is required, negotiate a reasonable price to prevent a significant increase in costs.