Foreign Manufacturer Risks

One of the big risks in dealing with an overseas manufacturer is you have to provide an irrevocable letter of credit to the manufacturer. The letter lets your bank transfer money to the manufacturer when the product ships.

But what happens if the product ships too early, ships too late or ships before you have a chance to approve the production run? The letter of credit may transfer your money anyway. One way to minimize this risk is to arrange for shipment through an international freight forwarder. The forwarder can contact you for authorization when the product is ready, and you can refuse delivery if the order isn't correct. Forwarders also help you with a letter of credit, customs and delivery information. To find a freight forwarder, check the Yellow Pages of large cities.