Export Documentary Credit
Export goods with complete peace of mind as you guarantee receipt of payment from your buyer. Make sure you present the documents according to pre-agreed conditions.
What is an export documentary credit?An export documentary credit is a form of payment for foreign trade in which the buyer's bank commits to pay the seller against documents specified in the terms and conditions of the documentary credit.
How does it work?The exporter sends the buyer a pro-forma invoice, detailing the terms and conditions of the transaction. This invoice should normally include:
- Goods specifications.
- Currency and amount payable.
- Payment terms (sight or usance).
- Shipment / delivery terms (CIF, FOB, etc) shipment date.
- Type of insurance (all risks, etc).
- Exporter's bank.
- Payment of overseas bank charges, etc.
The buyer's bank:
- Checks documents to ensure compliance with the terms and conditions of the credit.
- Hands over the documents to the buyer.