Make Efficient Use Of Documentary Credit
Some of the criticisms done to the use documentary credit include the complexity of operations, the involvement of different actors in the business, the degree of administrative failures resulting in significant load in the chain, the stiffness of procedures, and the lack of automation of the tasks.
It is important for exporters to make sure the process for documentary credit starts by negotiating with the customer. When the conditions of the agreement are not met, the bank will refuse the payment of the merchandise.
Here are the steps necessary for the proper conduct of operation:
Negotiate, negotiate, negotiate. Make sure that you agree with the importer of what conditions to set for the deal from the very beginning. Remember to look for realistic and convenient banks, deadlines, costs and forms of payment.
Request an instructive on how to open documentary credit. This model should include a sample of letter of credit or whatever type of documentary credit you will be creating.
Reception of the documentary credit file. When the bank informs you that your credit has been approved, you must read the terms and conditions of the document. Pay special attention to any restriction you find.
Inform yourself on how to make modifications to the documentary credit. It may happen that you are unable to fulfill the expectations of the importer. Make sure you establish timely communication with the importer to request any modifications.
Needles too say, read the terms and conditions of the documentary credit. This document will determine how the trade is done. Make sure that you read it thoroughly and understand all your obligations and responsibilities. If you agree with it, you may proceed to ship the merchandise.
Before opening and charges, the documentary credit is compared from exporter and importer to make sure everything is the same.
Whether you are exporter or importer pay special attention to deadlines, amounts, currencies, exchange rates, and the completeness of the document.
Lastly, if the bank that will give provide the payment for the merchandise finds any problem in the documentary credit make sure you correct those errors. You should negotiate with the issuing bank until there is agreement on how to proceed.
It is important for exporters to make sure the process for documentary credit starts by negotiating with the customer. When the conditions of the agreement are not met, the bank will refuse the payment of the merchandise.
Here are the steps necessary for the proper conduct of operation:
Negotiate, negotiate, negotiate. Make sure that you agree with the importer of what conditions to set for the deal from the very beginning. Remember to look for realistic and convenient banks, deadlines, costs and forms of payment.
Request an instructive on how to open documentary credit. This model should include a sample of letter of credit or whatever type of documentary credit you will be creating.
Reception of the documentary credit file. When the bank informs you that your credit has been approved, you must read the terms and conditions of the document. Pay special attention to any restriction you find.
Inform yourself on how to make modifications to the documentary credit. It may happen that you are unable to fulfill the expectations of the importer. Make sure you establish timely communication with the importer to request any modifications.
Needles too say, read the terms and conditions of the documentary credit. This document will determine how the trade is done. Make sure that you read it thoroughly and understand all your obligations and responsibilities. If you agree with it, you may proceed to ship the merchandise.
Before opening and charges, the documentary credit is compared from exporter and importer to make sure everything is the same.
Whether you are exporter or importer pay special attention to deadlines, amounts, currencies, exchange rates, and the completeness of the document.
Lastly, if the bank that will give provide the payment for the merchandise finds any problem in the documentary credit make sure you correct those errors. You should negotiate with the issuing bank until there is agreement on how to proceed.
About the Author:
Wade Henderson - recognized Professional - 15 yrs in the Business Finance Field - strong reputation for getting the deal done. IMMFinancial.com Trade Finance Bank Guarantee Get a totally unique version of this article from our article submission service