CHOOSING BEST FINANCING OPTIONS

1. CASH AGAINST DOCUMENTS

• Seller wants Cash Against Documents payment on the transaction date.Documents are received by the bank on March 01.
• Therefore transaction date is March 01,2018
• AKBANK charges flat commission % 4.5 for transfer. Transfer will be done on transaction date March 01.
• KOMSIS will pay all amounts from their TL account with AKBANK ( They have enough money in their account .)

2. LETTER OF CREDIT

• Komss is working with Akbank. Akbank charges following costs during L/C :

• L/C Opening commission 0.5 pct ( 0.005 )
• L/C Payment commission 1 pct (0.01)
• SWIFT Charges $ 5 per message. ( Total 10 messages )

China Company is working with Bank of China. They are charging following costs

• L/C Advising Commission 1 pct ( 0.01)
• L/C Documents Reviewing Commission 0.5 pct ( 0.005 )
• SWIFT Charges $ 7 per message ( 20 messages )

• AKBANK will charge KOMSIS $ 25.000 commission for payment to Chinese bank. Akbank will also charge $ 15.000 for themselves.
• Transferred amount and all other charges will be collected from KOMSISs Akbank account in Turkish Lira.
• Transaction date is : March 01,2018

QUESTION : WHICH OPTION IS BETTER ?