Case Study: $1M 180-Day Letter of Credit for Battery-Swapping Electric Dump Trucks

Introduction

As businesses transition to sustainable and energy-efficient transport solutions, securing electric heavy-duty vehicles requires structured payment terms and financial instruments that mitigate risks for both buyers and suppliers.

 

A Chinese buyer sought to import battery-swapping pure electric dump trucks but needed a trusted financial instrument to meet the supplier’s requirements. Given the high value of the transaction and extended 180-day payment term, a Letter of Credit (LC) was the best solution to ensure security for both parties while enabling smooth trade execution.

 

However, time was a major factor—the buyer needed the LC issued, advised, and confirmed within a tight 13-day window to meet the supplier’s shipping deadlines.

 

Challenges

The client faced several challenges in securing the electric dump trucks:

• Payment Security & Trust: The supplier required an irrevocable financial commitment before proceeding with production and delivery. An LC provided assurance that payment would be made upon fulfilling contract terms.
• Extended Payment Terms: The buyer needed a 180-day credit period, meaning a financial instrument that offered deferred payment while maintaining supplier confidence.
• Time-Sensitive Transaction: The LC had to be issued, approved, and relayed within just 13 days to avoid missing the supplier’s shipping deadline.

 

Solutions

To address these challenges, Trade Finance Company provided a structured and efficient trade finance solution:

 

• Tailored LC Structuring: A 180-day Letter of Credit was designed to meet both the buyer’s financing needs and the supplier’s payment security requirements.
• Expedited Processing: The transaction was carefully coordinated and executed step-by-step, ensuring all terms, drafts, and approvals were handled within the 13-day deadline.
• Seamless Documentation Flow: A clear and well-structured process was followed to ensure smooth negotiation, issuance, and advising of the LC.

 

Solution Implementation

The $1M LC issuance was executed in a structured timeline, ensuring all parties met their commitments without disruptions.

📌 Term sheet and draft sent – Initial agreement structured with clear payment terms.

📌 Signed draft received & closing documents sent – Buyer and supplier finalized the contract.

📌 08.02.25 – Payment received – Transaction processing began upon receipt of initial fees.

📌 13.02.25 – Closing documents received & sent for issuance – Ensuring compliance with financial and regulatory requirements.

📌 18.02.25 – First relayed copy received – LC issuance initiated.

📌 25.02.25 – MT730 received; LC advised to the beneficiary – Transaction completed successfully within just 13 days.

 

Results

The structured execution of the LC delivered the following key benefits:

🔹 Fast Execution: The entire process was completed in just 13 days, ensuring the supplier could proceed with production and shipment without delays.

🔹 Secure Transaction: The supplier received payment assurance, allowing production and shipment to proceed without risk.

🔹 Smooth Process Execution: The transaction was completed on time, ensuring the buyer secured the equipment without supply chain disruptions.

🔹 Enhanced Supplier-Buyer Relationship: The use of a Letter of Credit strengthened trust, paving the way for future collaborations with better trade terms.

 

Discussion

This case highlights the critical role of Letters of Credit in facilitating high-value international trade, especially for capital-intensive equipment purchases. Without an LC, the buyer might have struggled to:

 

❌ Gain supplier trust and secure production without full upfront payment.

❌ Ensure transaction security in a complex cross-border deal.

❌ Obtain extended payment terms without a robust financial guarantee.

 

By structuring and executing a 180-day LC in just 13 days, Trade Finance Company enabled the buyer to acquire cutting-edge electric dump trucks while ensuring the supplier had a guaranteed payment mechanism, mitigating financial risk for both parties.

 

Conclusion

The success of this $1M LC transaction underscores Trade Finance Company’s expertise in delivering secure and customized financial instruments that enable businesses to trade with confidence. Whether dealing with renewable energy equipment, machinery, or other high-value goods, we provide fast, efficient, and trusted financial solutions to support global trade.