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Export documentary credits
Often in the export business, you do not know your buyers well. And this goes without saying for new contracts. In this event, you should generally ask your customers to open a documentary credit in your favor. This arrangement defines various terms and conditions relating to the documents that must be presented, the deadlines for shipping goods, and the validity of the documentary credit. The documentary credit is opened in our favor by your customer's bank. We then inform you of the arrangement without obligation on our part. When you have shipped the goods, simply submit to us the documents you, or someone else such as the IHK (Chamber of Commerce and Industry) or the customs authorities, have prepared. We would then be happy to inspect these documents for you and present them to the bank issuing your trading partner's documentary credit. This ensures that the opening bank abroad makes the payment to you once documents conforming with the terms and conditions of the credit are submitted.
Sometimes the bank abroad is insufficiently well-known or the country risk is difficult to assess. In these cases, we recommend that you ask your customer to open what is called a "confirmed" documentary credit. After the bank has opened the credit and we have verified compliance with the above-mentioned criteria, we can then also confirm the payment obligation of the opening bank.
The main advantage of this approach is that your payment claim is also secured by our bank.
Import documentary credits
If you operate an import business, your suppliers might ask you to arrange for a bank to open a documentary credit in their favor. This could happen, for instance, if your partner in a new business relationship cannot yet conclusively assess your creditworthiness and reliability. In some cases, securing payments using import documentary credits is standard procedure or even a requirement in the source country.
If we open a documentary credit on your behalf, we are obligated to accept documents submitted within the stated deadlines and that are otherwise in compliance with the terms and conditions of the documentary credit. That means that we would then make the necessary payment immediately or on an agreed-upon date, depending on the instructions we have received.
The documentary credit is opened in favor of the above-mentioned bank. If necessary, we can also open credits in favor of one of our correspondent banks abroad. This bank will then notify the beneficiary – the exporter – of the availability of the documentary credit.
The key benefit of documentary credits is that payment is made only against documents that meet all of the requirements that you have specified.
The employees in our branches would be happy to provide additional details.