Hello everyone.
For those importers / exporters of goods who want a higher level of security in their billing and payment cycle, the documentary credit could make an extremely valid. There is more than an order that the exporter sends your financial institution to proceed with the payment of an operation at the time the bank exporter to submit supporting documentation that the goods have been sent in accordance with established agreements. If so, the bank will face importer to pay the transaction regardless of the final amount with or without balance ... Thus, the financial institution guarantees collection and also, in many cases, finances.
Logically, the transaction documentation to be extremely accurate and include all documents establishing that the goods and sending them meet the standards agreed. Therefore, any error both substantive and procedural, may involve the issuing bank refuses to pay proceed with what should be wary.
documentary credit can be revocable or irrevocable to the extent that before he paid, the importer may or may not cancel the operation to free will. Additionally it can be confirmed , when a third bank, usually with a strong international vocation of foreign trade operations and responds guarantees payment in case of default by the importer's bank. It is therefore an additional guarantee, of course, increases the costs of operation. Finally, the letter of credit may be in sight or term to the extent that there is a specific due date for making the payment.
This tool is useful ... and expensive. Their costs can reach five times the international transfer fee pure and simple we have negotiated with the bank but on the other hand, we can sleep easier if we have any particular difficulty with a supplier or started working with another for which there doubts about its solvency ... and sleep peacefully is priceless ...
Greetings
www.NLSasesores.com
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