- One of the safest payment instruments used for payment of goods or services. The bank undertakes in writing to pay the agreed sum to seller after fulfilling the documentary credit conditions set by the buyer – client of the bank.
- The documentary credit reduces the risk of non-payment for delivered goods or services
- The buyer has a guarantee that the bank will submit a payment only after documents proving that fulfilling the documentary credit conditions have been submitted.
- In case of a documentary credits with deferred payment we will purchase the claim even prior to maturity date
- Confirmed documentary credit reduces also the risk of non-payment connected to unstable political situation in the country of the buyer.
Relations between the parties of documentary credits are regulated by the international Uniform Customs and Practice for Documentary Credits published by the ICC in Paris.
We differentiate between these types of documentary credits from the view point of you as a client:
- Import (buyer) – open upon your request in our bank
- Export (seller) – open by the bank of the buyer in your favour
Benefits for the importer
- Opening a documentary credit in a reputable bank increases your credibility at business negotiations
- You have the guarantee that the bank will submit the payment only after all of the documentary credit conditions have been fulfilled
- by choosing suitable conditions you can ensure the quality, quantity and delivery time of the goods
- opening documentary credit can allow you to get better business conditions (extended maturity period, lower or no advance payment)
Benefits for the exporter
- Payment guarantee as the bank undertakes this obligation. When issuing documentary credit in your favour, the bank assumes the risk of non-payment for the delivered goods or services.
- Guarantee, that the banks will act only according to the documentary credit and that no party will change or cancel conditions set by the documentary credit without your permission.
- Confirming the documentary credit excludes political and economic risk in the country of the importer, threatening payment of the claim
- Documentary credit with deferred payment allows purchase of the receivables, so you will get financial means even prior to the documentary credit maturity date
How to apply for documentary credit
Ideally you should visit regional centre of the SLSP and submit Order to Open Documentary Credit and then sign a contract on documentary credit.