As a buyer, you have the risk that, despite the payment, the seller does not deliver your goods or delivers them but not in the required quality and quantity. As a seller, you run the risk that, despite the delivery of the goods, the buyer will not be willing or able to pay. One way to reduce these potential risks is to use documentary transactions.
Documentary transactions are part of the payment transaction, where payment is conditional upon the submission of specified documents. Documentary payments include documentary collection and documentary accreditations.
Do you not know your business partner well and need to be sure they will pay for the goods or service delivered? We offer you documentary letters of credit to secure the payment risk of your customer.
A documentary letter of credit is a payment and security instrument used mainly in international trade. By issuing a letter of credit, the Bank undertakes to pay the contractor a specified amount if he submits the documents in accordance with the terms of the letter of credit. Letters of credit shall be governed by the uniform practice and rules for documentary letters of credit issued by the International Chamber of Commerce in Paris.
Advantages of a documentary letter of credit for the supplier
- Using a documentary letter of credit will eliminate the risk of non-payment for the goods or service supplied
- you can be assured that if the conditions of the letter of credit are met, the bank will pay you for the goods or services supplied
- protect yourself from the risk that the customer will not be willing to take over the goods
- in the case of the deferred maturity of the letter of credit we will buy the receivable from you, which will give you the funds before the due date
- the issue of a letter of credit allows you easier access to obtain a loan to finance production
- in the case of a confirmed letter of credit, you eliminate the political and economic risk in the customer's country
Advantages of a documentary letter of credit for the customer
- you can be sure that the bank will make a payment only after the pre-agreed terms and conditions have been fulfilled by the supplier
- by selecting the conditions of the letter of credit you will ensure the required quality, quantity and delivery date
- By agreeing the deferred maturity, you will be able to make a payment for the goods delivered later
We offer you the
- issue of a letter of credit for the purchase of goods and services
- issuing a letter of credit for the purchase of real estate
- advice on issuing a letter of credit and the use of special types of letters of credit – revolving, transferable, stand-by letter of credit
- notification and confirming of letters of credit issued to you for your benefit
- purchase of receivables secured by a letter of credit issued by an eligible bank
- pre-contract consultation, proposal of appropriate payment terms and documents
From the point of view of the kind of documents submitted, we distinguish two basic forms of direct debit
- documentary direct debit
- direct debit of commercial documents accompanied by financial documents,
- direct debit of commercial documents which are not accompanied by financial documents,
- non-documentary direct debit (collection of bills)
- direct debit of financial documents that are not accompanied by commercial documents - bill (foreign, own), receipt, check
Documentary direct debit is a flexible, cost-effective payment instrument that can be effectively used in foreign trade. It is used in cases where it is not possible or expedient to issue a documentary letter of credit, but a higher security of payment is required than that provided by the clean payment. The role of the banks is to mediate between sellers and buyers. Documentary collection shall ensure for the seller that the documents and goods submitted by him / her are issued to the buyer only after the fulfillment of the collection conditions, which are usually the following:
- issuing documents against payment
- issuance of documents against the acceptance of the bill - the bank issues the documents to the buyer upon acceptance of the foreign bill
The collection of bills represents the procurement of performance from bills or ensuring the necessary actions for the exercise of the performance of the law of bills and notes in the event of non-acceptance, non-payment or other cause of bill hardship. A bill is a security expressing an unconditional written debtor commitment. It has the character of a transferable security and primarily performs a credit and a payment function.
If you have a bill that is payable to the debtor's bank, do not hesitate to contact us to secure the bill’s collection.
- import documentary direct debit / bill collection - from the buyer's (drawee) point of view, which is in the importer's position. In accordance with the conditions of a foreign bank, we will notify you of the conditions of collection, after which you can be issued the documents.
- export documentary direct debit / bill collection - from the seller's (orderer) point of view, which is in the exporter's position. Based on your written request to secure the export documentary direct debit / collection of the financial document, we will send the documents along with the collection terms of the collection bank (buyer's bank). Documents can only be issued to the buyer once the collection conditions have been met.
During implementation, we will ensure
- takeover of documents for collection.
- submission of documents to the drawee/collection bank,
- acceptance of the bill,
- all kinds of protest,
- change of collection conditions,
- execution of the payment of documentary collection.