A physical commodity deal moves through the same stages whether it is 500 tonnes of pulses or a year of diesel cargoes. Each stage has its own documents. Most deals that fail, fail because a document is missing, late or inconsistent.
Who this is forNew traders, intermediaries and brokers who want to present a deal a seller, a buyer and a bank will take seriously, and experienced traders who want a shared checklist with their partners.
Who is involved
| Party | Role | What they need from you |
|---|---|---|
| Producer / seller | Owns or controls the goods: refinery, mill, mine, plantation, or a trading house holding title | A verified buyer, a workable payment instrument, a clear destination |
| Buyer / end user | Imports for its own use or resale: importer, processor, state agency, distributor | Proven product, inspection, delivery schedule, price in line with the market |
| Trader | Buys and resells, takes title or arranges a back-to-back deal | Margin, financing, matching contracts on both sides |
| Mandate | Authorised in writing to represent one principal | The written mandate itself, which counterparties will ask to see |
| Intermediary / broker | Introduces parties and is paid a commission | Fee protection, clean introductions, no information gaps |
| Banks | Issue, advise and confirm letters of credit and guarantees; finance the trade | Full KYC, a coherent deal, documents that match |
| Inspection company | SGS, Bureau Veritas, Intertek, CCIC and others check quality and quantity | Access to goods, contract specification, sampling instructions |
| Shipping and logistics | Shipowner, charterer, freight forwarder, port agent, terminal | Cargo details, laycan, port nominations, documents for the bill of lading |
The stages of a deal
- Enquiry or offerThe buyer states product, specification, quantity, destination and timing. The seller answers with an indicative price and conditions.Request for quotation (RFQ) · Letter of intent (LOI) · Soft corporate offer (SCO)
- Know your counterpartyBoth sides exchange company documents and check each other: registry, ownership, sanctions, references.Company documents · Client information sheet (CIS) · KYC pack
- Firm offer and acceptanceThe seller commits to price, quantity and terms for a limited validity. The buyer accepts or counters.Full corporate offer (FCO) · Irrevocable corporate purchase order (ICPO) in broker practice
- ContractA sales and purchase agreement sets specification, quantity tolerance, price, Incoterm, delivery period, inspection, payment, documents, force majeure, law and arbitration.Sales and purchase agreement (SPA) · Often on GAFTA, FOSFA, RSA or ICC model terms
- Payment securityThe buyer's bank issues the agreed instrument. The seller may provide a performance bond.Letter of credit (MT700) · Standby letter of credit or guarantee (MT760) · Performance bond
- Trial shipmentCommon with a new partner: a smaller first lot proves product, documents and logistics before the full programme.
- Loading and inspectionAn independent inspector samples and weighs at loading. The vessel or containers are loaded.Certificate of quality · Certificate of weight · Draft survey
- Documents and paymentThe seller presents the documents the contract and the LC require. The bank checks them and pays if they comply.Commercial invoice · Bill of lading · Certificate of origin · Inspection certificates · Insurance
- Discharge and closingThe buyer receives the goods, checks quality and quantity at destination, and any claim follows the contract's rules.
Two ways deals are presented
Experienced producers and trading houses usually start with a short enquiry, a phone or video call and a draft contract. Online broker chains often use a fixed sequence of templates instead: LOI, ICPO, FCO, SPA, then a bank instrument. The templates are not wrong in themselves, but a long chain of intermediaries, documents that only exist as unsigned PDFs, and a procedure that asks the buyer for a bank instrument before any proof of product are the patterns banks and inspectors see in failed and fraudulent deals. See Scam Red Flags.
Acronyms you will meet
| Term | Meaning |
|---|---|
| LOI | Letter of intent. A buyer's non-binding statement of interest. |
| ICPO | Irrevocable corporate purchase order. A broker-market term for a buyer's order; it is not a bank instrument and binds little in practice. |
| SCO / FCO | Soft and full corporate offer. The seller's indicative and firm offers. |
| SPA | Sales and purchase agreement. The contract that actually binds both sides. |
| CIS | Client information sheet. Company details for KYC. |
| POP / POF | Proof of product and proof of funds. Real ones are verified bank to bank or inspector to buyer, never as a screenshot. |
| LC / DLC | Letter of credit; documentary letter of credit. The same thing: the bank pays against compliant documents. |
| SBLC | Standby letter of credit. A guarantee that pays only if the buyer fails to pay. |
| PB | Performance bond. The seller's guarantee that it will deliver, often 2–10% of value. |
| MT700 / MT760 | SWIFT messages used to issue a documentary credit and a guarantee or SBLC. |
| MT103 | The legacy SWIFT customer-payment message. Since November 2025 cross-border payments between banks run on the ISO 20022 format (pacs.008), so "MT103" now mostly names a bank transfer. |
| SGS / CIQ / CCIC | Inspection bodies. A report is only useful if you can verify it with the issuer. |
| B/L | Bill of lading. Receipt for the goods, evidence of the contract of carriage, and for an order B/L, the document of title. |
| NCNDA / IMFPA | Non-circumvention, non-disclosure agreement; irrevocable master fee protection agreement. See Commissions, NCNDA & IMFPA. |
TradeScout24 Trade Desk · General information, not legal or financial advice · Last reviewed 25 Oct 2026