Benefits Of ETADS versus Letter Of Credit
E-TAD is a negotiable electronic payment obligation, issued by a buyer to a supplier, as payment for goods or services rendered. The E-TAD is payable at a predetermined future date and can be transferred through endorsement. Electronic payment and encoding process allows E-TAD transactions to clear the banking networks, just like a check.
In the case of a letter of credit the supplier must meet very specific terms and conditions, which generally requires a lien on their assets. If the specific terms and conditions are not met, there is no guarantee of payment. E-TAD is unsecured. Investor purchases E-TADs from the supplier in exchange for immediate payment, which eliminates collection costs and risk. Investor then collects from the buyer's bank on the designated due date(s).In a practical sense a E-TAD resembles a post dated check
How does the E-TAD Program differ from a letter of credit?
A letter of credit is a document issued by a bank stating its commitment to pay someone (supplier/exporter) a stated amount of money on behalf of a buyer (importer) so long as the supplier meets very specific terms and conditions. Letters of credit are more formally called documentary letters of credit because the banks handling the transaction deal in documents as opposed to goods.In the case of a letter of credit the supplier must meet very specific terms and conditions, which generally requires a lien on their assets. If the specific terms and conditions are not met, there is no guarantee of payment. E-TAD is unsecured. Investor purchases E-TADs from the supplier in exchange for immediate payment, which eliminates collection costs and risk. Investor then collects from the buyer's bank on the designated due date(s).In a practical sense a E-TAD resembles a post dated check
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