Hi Hilldweller,Not sure how well you know the terms of...

Hi Hilldweller,

Not sure how well you know the terms of international trade so I would be happy to help!

Typically from what I understand payments will be issued via a letter of credit (LoC) that will be tied to the bill of lading. So in essence PLS will have a tonnage that will be loading onto the vessel, as which point the bank of the customer will issue a LoC at the agreed amount to PLS, which effectively acts as an IOU. This LoC will be paid directly from the customers bank to PLS, and it will be due at an agreed amount of time after the bill of lading. So this means even if the ship is delayed by 6 months on the water for example, the LoC will still be paid to PLS at the agreed moment in time.

From my experience, these LoCs typically are due between 30-90 days after their issue, but again this is subject to the terms that PLS have agreed with their customers. Importantly PLS includes these letters of credit as if it is cash that has hit the bank account at the time of the bill of lading, so quarterly revenue is inclusive of these IOU payments.

Then subject to any fluctuations in the spot/pricing mechanism, the customer may then be required to pay an additional sum (or credited), pending the final pricing for that shipment - I assume this would just be paid by way of cash at an agreed period after the shipment.

Hope that makes sense!

Pap