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Question:  If the end buyer collects on the "2% PG" (Performance Guarantee) for non-delivery of goods, how does the intermediary who is controlling the deal get compensated for their time and effort?

Answer:  You as the buyer/seller (controlling intermediary) offer to the end buyer a lesser value to what you obtained from the supplier or you offer no "P.G." to the end buyer even though you still get the "P.G." from the supplier.

Question: How can I figure out the distance by water from the Bonny Port in Nigeria to the Port in the Bahamas?

Question: Why do I need to secure a supplier first? Isn’t the buyer with the money the most important thing?

Answer: Not understanding why the supplier needs to be secured first can get an intermediary in a lot of trouble.

If an end buyer issues a DLC (Documentary Letter of Credit) to your account (the controlling intermediary) under the impression that you have a supplier (because of quotes you received from another intermediary seller) and the intermediary seller really did not have a supplier, then you can and will be charged on fraud.  The end buyer went through an expense setting up the DLC and in return was defrauded by you.  It is without say, you are in a serious situation.

  Intermediary often are not fully aware of the cost involved for a buyer opening a Letter of Credit.  

Fees for Letter of Credit

Secure the supplier first, find the buyer second. Once you get a quote from the person who is in actual possession of the product (supplier) than seek the buyer.

Question: Is the NCNDA any protection for an intermediary?  

Answer: Not even close to protection. The NCND is a total useless unless the product is in your own Country. Internationally this document floating around the Internet is impossible to enforce in a court of law.

Question: Does the MFPA (Masters Fee Protection Agreement) enforce payment of commission.

Answer: The flawed document MFPA does not protect a commission payment. There are documents under International Law that can protect your commission but the MFPA is not one of them?

Question: If I have secured a supplier should I ask for a mandate-ship.

Answer: No. A mandate to a supplier is an “agent” who acts on behalf of a disclosed principal.  A mandate is not just given to a person; (as implied so often). It has to be earned, after a strong relationship has been built from many years of dealing with a “principle supplier”.  The mandate agent can only act under the instructions of their principle (supplier) who must disclose to end buyer immediately when the offer is made to a end buyer and in closing the deal the “mandate agent” would be paid a very “small sum” by the supplier is often the end result. The mandate agent gets no commission from the buyer’s side of the deal.  

A mandate agent must close many deals in order to get any reasonable commission amount from the supplier.  Many intermediaries claim mandate-ship because they think being next to the supplier as a mandate agent is putting them in a great position.  This is incorrect. An intermediary in a chain deal will make a great deal more money than a mandate agent.  

The best position in a deal is the “controlling buyer/seller intermediary”.  The buyer/sell must know procedures well and act in the best interest of all parities on both sides of the deal.  

  Forget about becoming a mandate holder of a principal as it is not a feasible position to hold if you are looking to make the big money.  Learn the proper procedures, rules and policies and become the legally defined Buyer/seller.

Question: What does Swift MT 760 mean?

Answer: SWIFT (Society for Worldwide Interbank Financial Telecommunication) MT (Message Type) and the numbers indicates one of the many standardized message formats which comprise the SWIFT messaging system. These types of payment are internal bank applications for transferring money- Intermediaries cannot use such applications.  When a bank issues an MT 760 it practically issues a payment guarantee, on behalf of a customer, typically having first blocked the same amount of funds in the customer's account.  Impossible incorrect flawed applications. 

Intermediaries can only use Noncumulative revolving UCP600 Bank issued Irrevocable Documentary Letter of Credits (PAIDLC) when attempting to close deal.

Question: What does NCND or NCNDA mean?

Answer: NCNDA stands for (Non-Circumvention, Non-Disclosure Agreement.) This document is not worth the paper it is written on. If you have your name on this document and get circumvented, do you have hundreds of thousands of dollars to pay to take this through the international courts. This is a document that is very hard to enforce.  Only a misinformed or unskilled intermediary/broker would send you a NCNDA.

Question: What does FPA, IFPA or IMFPA mean?

Answer: IMFPA stands for (Irrevocable Master Fee Protection Agreement.) The FPA (Fee Protection Agreement) and NCND are usually attached to each other.  FPA / NCND is not the proper way to protect intermediary/broker’s interests.

Note: Beware if someone claims to be the Mandate, Supplier, End Buyer while at the same time requesting FPA and NCND. A real mandate never fears circumvention as he is protected by the one who extended the mandate to him.  A real supplier and a real End Buyer don’t get commission.

Question: What does BCL mean?

Answer: This stands for Bank Comfort Letter. It is a letter provided by the buyer’s bank to confirm that the buyer has enough funds to carry out the transaction. This is not a guarantee that the end buyer is going to buy.

Intermediaries often ask for a BLC in their procedures when they should be asking for acceptance of your "Offer".  Why would an end buyer want to disclose all his financial banking information to an intermediary over the Internet he does not know just because they request it? This is not a guarantee that the end buyer is going to buy.

Even if the end buyer did give a BCL what is the intermediary going to do with it. It's not liked the intermediary can conduct a soft probe. If his intent is to pass this information on to the supplier, then he has a problem. The end buyer has been disclosed and all the intermediaries involved in the deal have all been circumvented. An intermediary cannot deal with a BCL.

Remember the end buyer and the suppliers have nothing to do with the commission. The commission comes from the difference between the buying price and the selling price that is controlled by the controlling intermediary. (The person who pays the commission)

The BCL may apply to a direct end buyer doing business with a genuine Supplier on some occasion - but cannot simply be applied when a intermediary such as a controlling intermediary is involved.

Question: What does RWA mean?

Answer: RWA means (Ready Willing and Financially Able.)  Like the BCL the same applies to RWA.  (“look I have the money to buy"- IT DOES NOT MEAN I WILL BUY) If an intermediary asks for a RWA or BCL from a Buyer and the Buyer gives a Genuine RWA/BCL, then the intermediary has to continue with the deal which usually means disclosing the supplier to the buyers side - and here is your problem -The supplier is disclosed and the buyer changes his mind, then returns  to the supplier at a later time and circumvents everyone in the group. The buyer just saved himself millions of dollars. An Intermediary cannot deal with an RWA,

Question: If one sees the "CIF ASWP" why would you suspect it to be a scam?

Answer: CIF ASWP stands for Cost Insurance and Freight to Any Safe World Port. This is a flawed term which does NOT exist in the real market. The CIF part of the term is correct, the ASWP is wrong.

There is a simple logic behind this.  The shipment cost cannot be the same to ANY World’s Port! For example, the CIF (Cost Insurance and Freight) price to ship sugar from Brazil to South Africa is 5,000 miles and from Brazil to China would be double. This could make it over half a million dollars price difference. No buyer would be willing to pay extra just to get a “easily” quoted CIF ASWP price.

Question: What does EXW stand for and mean?

Answer: EXW stands for "Ex-Work’s and means the buyer pays all costs of transport from pickup at the suppliers premises. "e.g. EXW Tampa Florida." This means the supplier has sold off the warehouse floor and at warehouse prices.  The buyer makes the arrangements to have it picked up from the warehouse or another place. (Where ever the supplier says the product will be. The Supplier or Buyer/seller only must provide the goods as per contract at a designated place and nothing more. The contracted driver gives a pickup receipt to supplier and it is this receipt that allows the supplier to collect on the DLC If the buyer/seller or supplier is going to deliver the goods to the dock, then that's not ex works but FAS (free alongside ship) The price would now be higher.

Question: What does FAS mean?

Answer: FAS means (Free Alongside Ship)) (The supplier pays costs only to the port of loading). Loading and shipment are then the responsibility of the buyer.  Also means that once you have the goods on the docks on a designated date, then you can collect on your DLC the moment the goods are placed ready near shore Crane tackle for lifting on board ship- If the ship as ordered by the buyer is late- That's the buyers problem-You get paid once delivery "FAS" has applied as per Incoterms delivery rules- However the supplier must clear the goods for export. e.g. "FAS Port Canaveral, Florida". Your custom receipt is presented to your bank to apply collection on the DLC.

Question: What really is POP?

Answer: POP as often seen on the Internet to define (Proof of Product). There is no genuine POP (Proof of Product) capability and should be correctly defined as (the evidence of supplier in possession of goods being sold) under FOB/CIF delivery rules.  Even if you go and look at the goods, and take a picture, this is only proof that you saw the goods.  It does not mean that this is the goods that will be shipped to the buyer. The goods you looked at today could be sold the next day to someone else. The only real proof that the product exist is after delivery to the carrier/vessel with a Bill of Lading and an SGS certificate.  An SGS certificate ca not be forged as it only takes one phone call to authenticate it.

A Proof of Product ('POP') is often requested by buyers or intermediaries who believe it will give them some guarantee of the existence of the product and ability of the supplier to deliver. Many Pops produced are fake. The POP offers no proof at all, because once a POP has been drafted it is automatically out of date. The product could have been sold to another buyer and no longer exists. If an end Buyer were dealing with a supplier anything can be suggested especially in matters of POP. But no matter what the End buyer demands, he will still need to produce the financial instrument to pay for the goods FIRST before a supplier will even consider making any effort in getting goods ready for delivery. The money must come first- When an end buyer asks a buyer/seller he need a POP before financial instrument is in place, he is really saying: Please tell me who your disclosed principal is so I can circumvent you., POP really does not really give any proof, but it will give the opportunity for curmvention.

Question: My buyer wants a sample first before he enters into agreement with me. Shoulh5 I senh5 it to him? This could be very expensive and then he might change is mine.

Answer: The buyer is being very inventive. (suppliers hate this).  The buyer may be looking to reject the good seven if they are perfectly match the shipped goods.  This can easily happen.  Any sample given overrides any specs in the contracts.  In other words, if the goods arrive different even just a little from the sample, the goods can be rejected at port.  A buyer could create this problem to get the goods at a lower price. The buyer knows what they want.  SGS does the analytical inspection of the goods and advises exactly what is being shipped. The safest way to go is No Samples.

Question: What is a DLC mean in the international trading business?

Answer: (DLC) Documentary Letter of Credit is a type of financial instrument used to pay for goods being ordered.  The DLC has terms and conditions applied.  The end buyer issues a DLC to supplier and if all conditions are met by the intermediary and the supplier the supplier can obtain collection of funds.  By default, a DLC becomes an irrevocable Letter of Credit.

Note: When an intermediary is involved there are conditions the intermediary must meet before the DLC becomes active.  When this condition is met (Evidence of supplier in possession of goods) the intermediary can then transfer the DLC to the supplier.

The supplier will meet the conditions of delivery documents and then apply for collection.

Question: What is the best form of DLC?

Answer: The best form of DLC issuance are confirmed and irrevocable. The CIDLC is guaranteed by the issuing bank and not the buyer.  In other words, the bank is saying to the supplier "we don't care what the end buyer says, you the seller have met the condition of the CIDLC, we the bank will guarantee payment for the goods ordered".  

Question: Help me understand the real meaning of LOI and ICPO?

Answer: Flawed Terms for Intermediary

LOI:  This term is used out on the Internet by inexperience traders as a “Letter of Intent” which is incorrect. LOI mean “Letter of Indemnity.”

Inexperience “intermediary seller” who is claiming to be the supplier will ask for a “Letter of Intent” to purchase goods.  You as an intermediary cannot give a letter of intent to buy goods as your intentions are not to buy goods but to sell the "Title" of the goods.  So, your letter of intent to buy goods would be a lie.  Giving a Letter of Intent only means “Yes I intent to buy the goods but I can change my mind anytime.  A letter of Intent is not a binding contract.  The Letter of Intent is a total waste of time on a worthless piece of paper.  An intermediary can only give to the supplier an “Offer” which is to SELL the Title of the supplier’s goods.  

ICPO:  This term means Irrevocable Corporate Purchase Offer. This term will not work for the intermediary. The ICPO is a misused term by intermediaries. The intermediary is not the corporation purchasing the goods, so he cannot issue an ICPO.   This term may be effective for the End Buyer to the Supplier but not for an Intermediary. The ICPO is used in local or interstate trade, particularly in the USA. An ICPO must also be backed by assets.  If an end buyer issues an ICPO and then attempts to cancel the obligations a week later, the supplier could claim breach of contract, as the ICPO is a binding contract. The supplier will only accept an ICPO from a corporation with assets.  An intermediary cannot and must not issue or request an ICPO as in doing so they are putting themselves in a fraudulent position. As an Intermediary, different applications apply. ICPO's are only used in international trade between large corporations and where one corporation has a subsidiary office in another country outside the USA.  

Once again, an intermediary cannot “irrevocably offer to purchase” the goods when they are not purchasing.  They are offering to sell the “Title” to the said goods, not purchase and take possession of goods. If any intermediary offers you an ICPO you know they are inexperience or trying to scam you.  

Only the end buyer can offer such a document.  

The intermediary should first ask the supplier for a “RFQ” (Request for Quote) not issue a (LOI). The next document is an “Offer” for you as a “buyer/seller intermediary” to consider from the supplier (“Offer to Sell”) Not (ICPO).  This is all that is needed (Quote, Offer).

Not understanding the proper procedures and documents for an intermediary one of two things will happen.

1. The deal will collapse, and/or
2. You as an intermediary will be circumvented.  

Only sometimes these flawed terms and documents will work between an end buyer and a real supplier.

Not very often but sometimes, as anything can be implying between end buyer and supplier. For the intermediary these terms and documents will NEVER WORK. In the International Trading business, THE ONLY THING NEEDED IS A “QUOTE” “OFFER” “CONTRACT” “PAYMENTS” AND “DELIVERY OF GOODS”.