In this second installment of my two-part article, I endeavour to consider the documentary credit from the point of view of an exporter as well as its bank and provide some advice on how to best benefit from the effective use of documentary credits.
Documentary credits are one of the oldest, most sophisticated, and safest payment instruments used in international trade.
Having an understanding of the types of LC availability, and the differences between them, will help the beneficiary formulate the terms of the letters of credit that it would be willing to accept, and to mention such terms in their discussions and sales contracts with their clients.
With this global pandemic, it is recommended to encourage the use of guarantees and counter-guarantee subject to URDG 758 as it provides a balance between the interests of all the parties involved.
Documentary credit may be one of the most convenient payment method available to buyers and sellers, but one should know its limitation to avoid issues and penalties.
All IBAS GTF – Global Trade Finance Factory user banks, including ABN AMRO Bank, have adhered to the SWIFT Release 2018 standards since switchover on 18 November 2018 London –… read more →