Opening of documentary credits
The best balance between the buyer’s and the seller’s obligation
A documentary credit provides the seller with a payment certainty, prior to the dispatch of the goods, and even before starting its manufacture.
In turn, the buyer is assured that its payment obligation will only come about when the seller has provided sufficient supporting documentation evidencing the dispatch of the desired goods. The credit is, thus, a guarantee for both parties.
From a more instrumental point of view, a documentary credit can be understood as a commitment by a bank to pay upon presentation of the requested documentation, irrespective of the underlying obligation. That is to say, the bank that issues the credit (issuing bank) obliges itself to purchase the documents from the beneficiary, irrespective of the compliance with the purchase contract or rendering of services, provided that the said documents comply with the credit terms and conditions.
Also, a documentary credit is often a financing mechanism, as it can be used by the buyer to obtain a deferment of the payment without the seller increasing its risk. The seller will in turn be able to mobilise more easily the credit to which it is beneficiary, thereby obtaining funds from a third financial party.
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Advantages
Advantages for the buyer: - More acceptable for the seller than any other method of payment
- Confirmation of buyer’s own solvency
- Reception of the necessary documents
- Adaptability to the sales contract
- Increased possibilities of obtaining payment deferral
- Legal protection
- Desired delivery conditions
- Control over delivery dates
- Greater business possibilities
Disadvantages: - It’s the documents, not the goods, that are paid for
- Costlier that other methods of payment
- Seller’s agreement is needed to cancel or modify the credit
Furthermore, we offer you:
- Close, professional and personalised management of your documentary credits
- Immediate opening of all your documentary credits
- Examination of documents by the best professionals
If yours is an importing company you can order the issuance of documentary credits, without leaving your office, through BS Online Companies , with comprehensive help tools and automatic controls aimed to ensure that the credit does not contain any errors or basic faults that could affect your security as the applicant. Also, before the credit is finally issued, the conditions you established will be checked personally by our specialists in person, ensuring that your security as the buyer is strongly reinforced.
Come and see us
Write to us
- Guides and forms
- Publication The documentary credit and the warranty (, 80 pages, 980Kb, spanish version)
- Application form (2 pages, 245Kb)
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