International trade transactions often require establishing trust and credibility between the parties involved, which can be achieved through providing proof of product (POP) and proof of funds (POF). However, it is important to note that the cost of issuing POF is typically paid by the buyer, while the seller bears the cost of issuing POP via SWIFT. Additionally, these procedures are carried out after signing the Sales and Purchase Agreement (SPA), with the buyer providing POF first, and the seller providing POP after receiving it.
Cost Considerations for POP and POF
The cost of issuing POP and POF via SWIFT varies depending on the bank and the country where the transaction is taking place. Typically, the buyer bears the cost of issuing POF, while the seller bears the cost of issuing POP. It is important to consider these costs when negotiating the terms and conditions of the transaction to avoid any misunderstandings or disputes later on.
Timing for POP and POF
POP and POF are provided after the SPA has been signed, ensuring that the terms and conditions of the transaction are agreed upon by both parties. The buyer typically provides POF first, and the seller issues POP after verifying and receiving it. This process helps establish trust and credibility between the parties involved and ensures that the transaction is completed successfully.
Procedures for Providing POP and POF
To provide POP, the seller must gather all relevant documents that confirm the availability and quality of the product being traded. These documents must be verified by an independent third party, such as an inspection agency or a lawyer. Once verified, the seller issues the POP via SWIFT to the buyer.
To provide POF, the buyer must provide documentation that confirms the availability of funds to complete the transaction. This can include bank statements, proof of deposit, or a letter from the buyer’s bank confirming the availability of funds. The buyer issues the POF via SWIFT to the seller.
Timing is crucial in providing POP and POF. These documents should be issued promptly to avoid delays in the transaction, and any issues or discrepancies should be resolved quickly to avoid complications.
Conclusion
POP and POF are critical elements in establishing trust and credibility between the parties involved in an international trade transaction. It is important to consider the associated costs of issuing these documents via SWIFT when negotiating the terms and conditions of the transaction. Following the procedures outlined in this article, issuing POP and POF promptly, and working with experienced intermediaries such as Krou Trading LLC can help ensure compliance with all relevant regulations and requirements and ensure a successful transaction.