What Are Proof Of Funds And How They Are Useful?

The business world is full of many challenges which are wisely faced by many businessmen. Especially, getting steady finance and trading with unknown clients are some of the common challenges faced by businessmen. Though the financial issues are faced with the loan options available in the financial organization, trading with unknown clients are still the major challenge for many businessmen.

Especially, the lack of trust among the seller and buyer is the main reason why many businessmen avoid trading with unknown clients. But trading is an unavoidable factor in business development. Hence, instead of avoiding international/national trading, you can look for ways through which you can build trust.

If you have an offshore bank then you would have known that the Proof Of Funds (POF) will help in handling the trust issues. The seller usually gets trust issues thinking that they may not get the payment after delivering the products. This banking instrument will help in facing this challenge easily.

The POF is a letter or a document that certifies that the company, individual or corporation has sufficient money for this transaction. This banking instrument is generally issued by the commercial bank to the seller so that they can start the trading without any trust issues.

How does the Proof Of Funds work?

As mentioned earlier, the Proof Of Funds refers to the document that demonstrates the ability to complete the specific transaction. This can be usually obtained from the offshore banks where you have an account. You can apply for the POF at the bank and wait until it is approved. The experts in the bank will verify your transactions and eligibility before providing this banking statement.

This letter is also called a Bank Confirmation Letter (BCL). This is one of the biggest advantages you can get from the bank for your business development. The POF is generally used when the client wishes to trade valuable gems, gas service equipment or any other valuable goods. Especially you can use these services when you trade internationally.

Even if the seller is within your country, you may find time to visit the seller to check the goods and build trust for the transaction. But it is not the same with international trading. Most of the time you would have not seen the seller which is the main reason for the lack of trust. But with this banking instrument, you can build trust in the seller.

You can get the quote from the seller and apply for the bank confirmation letter at the bank. With reference to your application, the experts in the bank will check your balance and transactions to provide the bank confirmation letter. If you are eligible then you can get this banking instrument and proceed with the transaction.

But note that this banking instrument only verifies the creditworthiness of the client but not provides assurance for the payment. Thus, if you are engaged in import and export trades then use the Proof Of Funds for trading and to develop your business.