Using documentary credits when you export goods or services means the importer’s bank commits itself to paying you, provided that the conditions of the documentary credit or letter of credit have been met.

Advantages of export documentary credits

  • Payment is guaranteed by the importer's bank prior to shipment
  • Enhanced security of on-time payment
  • Enhanced security that an order will not be cancelled or changed without your approval
  • Improved liquidity, as payment can often be released shortly after shipment; and
  • Various financing options may be available which include enhanced levels of protection
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Export Documentary Credits

Check the documentary credit carefully
You should examine the documentary credit carefully when you receive it so you are certain that the terms correspond to what has been agreed. It is important for you to note that the documentary credit only guarantees payment if your company is able to comply with all its requirements and conditions. This process may necessitate the involvement of employees in your company who are responsible for

  • Closing the deal
  • Ensuring that the goods are ready for shipment on time
  • Preparing the documents; and
  • Arranging transport

You should also check that

  • The text is clear and unambiguous
  • The terms and conditions are the same as those you agreed with the customer
  • The documentary credit has been issued by a reputable bank
  • The documentary credit is subject to the international rules for documentary credits
  • All expressions used in the documentary credit are clear and unambiguous
  • The documentary credit does not contain conflicting requirements
  • The deadlines for shipment and presentation of relevant documentation can be met
  • Any insurance requirements can be met
  • Transport and transport documentation requirements can be met
  • Partial delivery/transhipment is permitted, if necessary
  • Your name and address are shown exactly as they appear in your documents
  • The buyer's name and address are shown correctly; and
  • The description of goods is the same as in all the other documents.

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