Proof of Funds Program Procedures
A Proof of Funds is a financial document and cash asset that proves a party has the capability and funds to complete their side of a transaction. This financial document is most often provided in the form of a bank, security, or custody document for a specific transaction. Additional information on Proof of Funds here.
Proof of Funds providers have different procedures that vary by company and transaction. That being said, the following is a general example of what to expect in the Proof of Funds process.
An application is made for a specific credit enhancement product. The application contains the appropriate documentation that is required, such as proof of identification for the client, corporation, and proof of fee capability.
If approved the provider then issues a contract that details the terms, conditions and escrow instructions and procedures. No credit checks are run or financials checked, save proof of funds for the fees.
After the terms and contract has been signed by all parties, it is required that the client deposit the arrangement fee with a third party escrow. The client is required to use the provider’s escrow service company in most cases, although some providers will work with any respected escrow provider.
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The provider typically takes from 2 to 5 business days to set up the account and provide the proof of funds account depending on the scenario. A Sub Account and Master Account POF service takes only 2 to 3 days; Soft Escrow accounts take 2 to 3 days; where Hard Escrow take 3 to 7 business days.
SWIFT Cash Collateral Accounts along with SWIFT-MT760 SBLC accounts take 2 to 3 days in many instances, but up to 10 business days for the Euro Cash Collateral Accounts; SBLC, BG, and CD instruments are case by case and take up to 30 days depending upon the situation and proof of funds provider.
Once the account is set up and the service provided the client and/or the receiving bank may verify and authenticate the account or instrument according to the lending agreement, service agreement, and/or escrow instructions. Usually within 24 hours upon receipt of the service or instrument (according to escrow instructions and service agreement), funds are released from escrow.
Renewals range from 30-60 days, or 1 year are often available at discount.