Documentary trades

Do you sell or buy goods or services? Do you purchase materials for your production, manufacture products and sell them? UniCredit Bank specialists will advise you how to use documentary operations to secure or finance your local and foreign transactions.

UniCredit Bank ranks among market leaders in documentary trades. We carefully monitor each of your collections and letters of credits and will inform you of any ambiguities. You can rely on our professional and accurate approach.

Instruments mitigating risks associated with your business

  • Do you wish to make your offer more attractive by providing a longer maturity period, however, you are not willing to take on the risk of default – then documentary letter of credit is the ideal financing instrument for you.
  • When carrying out a first deal with a new business partner, you are not sure of your business partner’s payment discipline or if you are worried about territorial risks existing in the country of your business partner’s operation, then use a documentary letter of credit – i.e., a commitment of the buyer’s bank to pay - to secure your transaction.
  • For recurring exports, we recommend using a documentary collection or bill of exchange collection.

Our experts are here for you

  • UniCredit is a market leader in documentary letter of credit financing in the Eastern Europe. Our global correspondent network allows us to assume the risks of default and thus to facilitate not only successful signing if your contracts but also payment of due amounts.
  • Our expert team will prepare trainings and presentations for you to explain how the instruments work and which transactions are eligible.
  • We will help you to choose and effective way to secure your specific business transaction.
  • We will provide you with our professional assistance in preparation of your business contract, business documents and in making a list of terms for successful completion of the deal.

Types of documentary trades

Documentary letter of credit

  • A letter of credit constitutes a commitment of the buyer’s (importer’s) bank.
  • It is used to secure payments for almost any type of business contracts.
  • An appropriate formulation of the terms for a letter of credit can eliminate certain risks associated with local or foreign transactions.
  • For the buyer, a letter of credit means a security that the buyer’s bank will pay no money until the seller meets the agreed conditions.
  • For the seller, a letter of credit means a security that after the seller meets the agreed conditions the buyer’s bank will pay for the delivered goods irrespective of the buyer’s existing payment situation.
  • A proper security for a transaction improves the buyer’s negotiating position and facilitates negotiation of better price conditions and longer payment terms.
  • Thanks to clearly defined deadlines, a letter of credit is a benefit for the seller in planning his production.
  • A letter of credit with a deferred payment date can be sold for immediate cash and thus improve your cash flow.
  • Letters of credit are governed by Uniform Customs and Practice for Documentary Credits issued by the International Chamber of Commerce (ICC), in Paris, publ. 600, rev. 2007 and the International Standard Banking Practice (ISBP).

Documentary collection

  • Collection serves as a protection of the seller who will be paid for the supplied goods and services as the Bank will not release the documents authorising the buyer to dispose of the supplied goods until the buyer meets the collection terms (e.g. until the payment is made).
  • Collection serves as a protection of the buyer, as after meeting the collection terms, the buyer gets from the bank the documents authorising the buyer to dispose of the supplied goods.
  • In most countries collections are governed by the Uniform Rules for Collections (rev. 1995) published by the International Chamber of Commerce in Paris under No. 522. 

Applications for a letter of credit or a collection can be filed through internet banking.

Options of financing exports using documentary letters of credit

Assignment of settlement under letter of credit

  • An irrevocable commitment by the supplier’s bank to pay by order of the supplier/seller (beneficiary under the letter of credit) to a third party (e.g. a sub-supplier) under the letter of credit a part of the proceeds under the letter of credit up to a specified amount.
  • Settlement may be assigned even to multiple entities, however, only up to the total amount of the letter of credit.

Forfaiting

  • Purchase of the receivable underlying the letter of credit without recourse to the client, with all risks of default borne by the bank.
  • Any letter of credit with a deferred payment date upon accepting documents and signing the contract.
  • A favourable export financing scheme with all risks of default borne by the bank.

Post-financing of documentary letters of credit

  • A financial instrument allowing to prolong the maturity period for the customer, with all risks of default borne by the bank.
  • No drawdown of credit lines - The letter of credit is payable after presentation of documents.
  • All communication takes place between the buyer’s bank and supplier’s bank without the client’s participation, and the risk of default is not borne by the client.