Banking
Issues
Packing
Credit (Running Account)
Recently there was a query
from one of our colleagues as to how to monitor the
running pc account. Further running pc is
settled every time with Inward Remittances only instead of post shipment facility. Whether it is permissible?
The
following was considered:
1. Ensure we have a sanctioned limit for a running PC account.
2. Eliminate PCs on a FIFO basis.
3. Back up PCs with order / LC and order value should cover the PC
outstanding.
4. Religiously conduct stock verification / unit inspection every
month and satisfy about the availability of security.
5. Overdue PCs should be charged with additional interest wherever
applicable.
6. By watching the conduct of the account, we can gauge the average
time taken for realization of export.
Follow up the outstanding PCs after that average time. Or go by LC / order terms as the case may
be.
7. In some of the geographies, big clients prefer direct payment
instead of routing bills through bank.
We can verify the order / LC terms for this.
8. Booking of forward contract is permitted for such transactions.
9. PC should be covered under ECGC insurance.
10. Even after receipt of direct payment, client may submit bills and
it should be treated as Misc. collection bills and lodged & realized
accordingly. They may ask for eBRC at a
later date to claim export incentives, if any.
11. EEFC facility can be extended.
12. Post shipment facility is not a must. However, ECGC cover may not be available for
PC after the goods are shipped. So
ensure that the time gap from shipment to realization is short. If usance period is there, it is advisable
to get at least a copy of the bill for lodgement so that ECGC cover is
continued.
