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