Prepaying Foreign Suppliers in Cash

One very common scenario is to have a client request that we prepay their foreign supplier in cash - rather than with a letter of credit (or cash against documents) which is our preference. Many prospects are often disappointed when we tell them we cannot prepay their suppliers by wire transfer.

There is a very logical reason why we do this. That is because if something goes wrong, we have no recourse against the foreign supplier. If they do something wrong - or worse ship no product - the only recourse we have is to sue in their own country. That is always a losing proposition.

Now, think about it this way. If we prepay for goods in cash we are basically giving the foreign supplier the equivalent of an unsecured business loan. Why would we do that? Especially, when our area of expertise is purchase order financing - not "unsecured cash loans to suppliers in distant lands".

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More about business loan financing. Interested in business financing in Pennsylvania? Learn about factoring Pennsylvania and invoice factoring in Pennsylvania.