Responding to PostID 477448 on ``e.digital`` by SRT06:

You seem to be knowledgable about OEM payment. Do you know at what point the final payment is usually made to the OEM?...

Yes, the company I work for does a lot of container OEM biz. Usually, the OEM / ODM gets paid upon shipment and presentation of approved documents. Of course, other terms can be included in the Letter of Credit.

As a standard, the Letter of Credit is what covers the manufacturer or ODM as well as the buyer from mis-communication or outright crooked deals. The goods are loaded into a container, inspected to see that the shipment meets the Letter of Credit guidlines, then the Letter of Credit is exercised with the original (that`s important) documents going to the issueing bank. The goods ship via very large cargo ships and the manufacturer is paid (usually via wire transfer). The original documents go to the buyer for Customs clearing, duty payments, port fees, etc...

The actual transation is a bit easier than this may sound. The hassle factor is cut to a minimum by freight forwarding companies that specialize in this type of overseas shipping.

To bring this back to EDIG. We do not know the terms of their PO with Wencor. From the information sunpoop provided, my guess is Wencor has a Letter of Credit issued to EDIG which EDIG will not be able to exercise since they do not have the documents to support their claim -- the product did not ship.

Letters of Credit do not have to exercised. They can cost up to $800 per container. So, cash rich companies use the Letter of Credit to protect themselves. Upon inspection adn approval, they may elect to fund the shipment via wire transfer and leave the Letter of Credit open for the next shipment from the same OEM / ODM. This is common among companies that do a lot of business with each other as it cuts costs and there is some level of honor among thieves.

John