Crédito Documentario de Importación
It is the safest means of payment for buyer and salesman
It entails an irrevocable commitment by the bank that issues it
- It allows you to prove your solvency to your supplier. It provides you with legal protection. It allows you to obtain financing from your supplier.
Benefits of the Import Documentary Letter of credit
A documentary letter of credit is the payment method chosen when there is little trust between the parties or when a collection guarantee is required to be provided in the operation, in order to access other products and/or services (for example, financing).
This is the most secure payment method for buyer and seller because it represents an irrevocable commitment by the bank that issues it (the importer's bank).
This commitment is on the condition that the payee of the credit (exporter) presents the required documents in the documentary letter of credit itself, in the established format and time frame, that is, that it complies with its commercial obligations.
As an importer, you have to give instructions to Bankia to issue a credit that reflects the commercial agreements you have reached with your supplier.
You should also indicate what documents you need in order to ensure that the merchandise en route is that which you have agreed to buy, by what means of transport it is travelling, on what date it was loaded, on what date it will arrive, what the final destination is, when the payment has to be made, what is the incoterm applied, etc.
It involves reproducing in the documentary letter of credit all the prior agreements agreed with your supplier.
It is important to request all the documents necessary for its processing, sending and for justifying its import to the authorities. Taking into account that the documentary letter of credit manages documents (not merchandise) and is independent of the business and contractual relationship between the parties.
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As an importer you will be interested to know that:
- It ensures that you will only have the obligation to pay if the supplier presents the required documents that prove the shipment of the merchandise, in accordance with what was agreed upon.
- It allows you to prove to your supplier your own solvency, thus facilitating your negotiations.
- It provides you with legal protection, since credits are regulated by a specific international regulation of the International Chamber Of Commerce (UCP600).
- It gives you peace of mind, because the documents are reviewed by experts.
- It allows you to obtain financing from your supplier, since when providing a bank guarantee it is easier to negotiate a deferred payment.
- Your supplier will be able to collect payment in advance through Bankia's reverse factoring service (non-recourse financing).