Wath is POP
So many times we receive requests from would-be Buyers to see Proof of Product (POP) up front before they sign or do anything. Obviously, any such Buyer is not real and is looking to use the POP to borrow money or to defraud someone else. Accordingly, here is our understanding of POP and how and when it will be produced.
(1) Regardless whether it is the oil business or another large business deal, the very first step for a serious interested BUYER, is for the BUYER to issue an ICPO. This costs absolutely no money and clearly identifies the BUYER and the products and quantities he is interested in purchasing. The ICPO and other documents required by the SELLER
(Money Laundering Form, Attestation Letter, Fraud Warning all signed by BUYER and his BANK) should be sent to SELLER.
(2) Based on the ICPO and the other documents, the SELLER is able to perform due diligence on the BUYER and to prepare a DRAFT CONTRACT for BUYER. The DRAFT CONTRACT contains the terms and conditions that the SELLER is willing to offer to the BUYER in connection with the transaction. This draft is sent to the Seller for signature or insertion
of requested changes, additions, or modifications. Eventually, through this back and forth exchange of the DRAFT CONTRACT, if the parties agree on the terms, it is signed and becomes a FORMAL CONTRACT.
(3) The final signed CONTRACT is given to both the SELLER's and BUYER's banks so they can participate in setting up the exchange of documents to accomplish delivery of the product and payment. , so both banks
(4) The BUYER's bank now notifies the SELLER's bank that the Buyer has sufficient funds available to pay for the product under the CONTRACT. This should be in the form of an MT 103 or RDLC in the case of a contract for a fixed time period, or an L/C for a Spot Contract. This instrument should be sent directly bank to bank to the SELLER’s
ATTORNEYACCOUNT designated in the CONTRACT. THE SELLER's BANK then notifies the BUYER's bank that the SELLER has the required Proof of Product in the form and content required by the CONTRACT. This POP is never
sent directly to the BUYER. In most cases the POP will be placed with SELLER’s ATTORNEYin escrow pending
(5) Once the SELLER’s ATTORNEY verifies both the payment instrument and the POP he will notify both parties and the actual delivery, loading, shipping takes place, as agreed in the CONTRACT and payment is made.
POL TAM Ltd. delivers to many refineries worldwide and is mandated by Rusian major to sell its products
Please provide this to your buyers who keep asking for the POP up front, before even issuing an ICPO so they will be familiar with our processes and procedures and will be prepared to provide the necessary information and documentation so that we don’t waste time on false offers.