Letter of Credit

What is a documentary letter of credit?

Documentary credits are a payment method that ensures that the exporter receives payment immediately after the goods have been sent. Documentary credits are a guarantee. The bank issuing the documentary credit guarantees that the exporter will receive payment once the terms of the documentary credit have been met.

The International Chamber of Commerce (ICC) in Paris has drawn up the Uniform Customs and Practice for Documentary Credits. This set of rules is recognized worldwide and specifies the payment obligations of banks and their obligations to handle documents under documentary credits.

The bank is only responsible for handling documents and is not responsible for the goods or the project to which the documents relate.

Advantages for the importer:

• Provide reassurance to suppliers through Solidaire Banque's irrevocable commitment to pay the amounts due.
• Pay only upon the presentation of compliant documents, reviewed and verified by Solidaire Banque.
• The importer can expect the goods to be delivered.

Advantages for the exporter:

• Benefit from a payment commitment from the issuing bank.
• Hedge against the risk of default as well as country risks by requesting confirmation from Solidaire Banque.
• Receive payment in due time.66