The documentary credit confers a flexible secured method for cashing the countervalue of goods shipped, same time being a short term financing solution that enables you to mitigate risks (both commercial and country risk) associated with your business relationship, also enabling you to further develop both existing and potential partnerships.
the importer’s bank irrevocably undertakes to effect payment against presentation of documents complying with the terms and conditions of the documentary credit issued
the importer’s bank pledged an irrevocable undertaking to effect payment, in case you, the exporter, present complying documents under the documentary credit, regardless of the buyer’s willingness to effect payment or not
the export documentary credit offers leverage to the exporter for the reason that payment is effected by the importer’s bank only against presentation of complying documents, the importer not being able to prevail himself on potential quantitative or quality merchandise defects that may occur upon delivery of goods
under a documentary credit, funds can be credited to the exporter’s account, depending on the documentary credit terms and conditions, in connection to discounting of proceeds
Key points for the exporter
you have the advantage of ensuring that the terms and conditions of the underlying commercial contract have been correctly encompassed within the text of the documentary credit received and advised by the bank, before the goods are shipped
if drawn properly (you are strongly advised to contact our specialists prior to concluding the transaction), it can offer you a source of financing