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Import and Export Documentary Credits

Import and Export
Documentary Credits

Make your international business in a safer manner!

Advantages

The Documentary Credit is an irrevocable commitment assumed by the Issuing Bank that, according to the instructions given by an Importer, is obliged to pay- at sight or at term - to an Exporter or to its order, against the presentation of documents according to the conditions mentioned in the Letter of Credit.

The Documentary Credit enters the banking circuit via importer and represents a payment guarantee in favour of the exporter provided that the terms and conditions of the Letter of Credit are observed. It is a means of payment/receipt that confers greater safety to international trade transactions, particularly in what concerns relations established with new international trading partners. 

  • The Importer (applicant) - has the guarantee that the Bank's commitment to pay the amount of the Letter of Credit shall only be met if the exporter complies with all the terms and conditions of the Letter of Credit.
  • The Exporter (beneficiary) - has the guarantee that the commodities exported are paid, against the delivery of the documents and in accordance with the terms and conditions of the letter of credit.      It enables the negotiation of the early payment of the value of the exports after the delivery of the correct documents to the Bank, enabling the granting of a banking loan.

The Documentary Credits are ruled by the Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce.  


02.002.5614 2012/04/24

Costs

Consult the Pricing in force, available for consultation at any  Millennium bcp Branch near you.

Features

The Documentary Credit is an irrevocable agreement wherein the issuing bank, pursuant to a request made by the Importer (applicant), assumes the irrevocable commitment of honouring a payment to the Exporter (beneficiary), or to its order, against the presentation of documents and provided that the credit conditions are observed.

Type of Contract

Import Documentary Credits - a credit agreement established between the Bank and the Proponent(s) (Importers), wherein the Bank grants a credit by signature to the Proponent(s) in accordance with the conditions and terms defined in the Contract.

Export Documentary Credits - a contract does not apply, since it is considered that the same are opened and contracted with a foreign Bank pursuant to an order given by one of its Importing Clients.

Forma de utilização

Basically, the Documentary Credits can be used as follows:

  • Irrevocable Credit - except if otherwise instructed, every credit is irrevocable.  The Issuing Bank has the firm commitment to pay, accept or negotiate, provided that the terms and conditions of the credit are observed. The credit cannot be altered without the agreement of all interested parties.
  • Confirmed irrevocable credit  - gives the beneficiary a stronger guarantee since the confirming bank (usually the advising bank) commits, on account of the issuing bank, to pay/accept/ and /or negotiate, regardless of the payment having been effectively made by the issuing bank and provided that all the terms and conditions of the letter of credit are observed.  
  • Transferable Credit - gives the beneficiary the power to transfer the rights of the credit in favour of other beneficiaries in accordance with the terms and conditions established in the initial credit, enabling the beneficiary to exchange the bill presented by its supplier by its own bill and an eventual reduction of the amount of the credit, specifically the value per unit on the validity date during the period for presentation and on the limit date or shipping period. If such an exchange is not made pursuant to the first request made by the transfer bank, this one may send to the issuing bank the documents received under the transferred credit. 

Ways to pay

The reimbursement plan may be made as follows:

  • At sight - The Exporter agreed to receive the payment the moment the documents required under the credit are presented and does allow the Importer to have a deferred payment term. From the moment the Bank receives and checks the  documents and provided that the same are in accordance with the terms and conditions of the Documentary Credit, it will pay the value mentioned therein at "sight", in accordance with the terms and conditions of the letter of credit;
  • Acceptance credit - the Exporter agreed a payment term with the Importer that is expressly mentioned in the commercial contract established between them. If the Exporter accepts these conditions it will benefit from a payment guarantee in the form of the documentary credit opened on its behalf;
  • Credit with a deferred payment - The Exporter agrees with the Importer on a deferred payment term. By benefiting from a deferred payment, the Importer may get, in advance, the funds coming from the sale of the commodities and pay the credit with the revenues;
  • Mixed - the payments can be made at sight and be deferred. The Exporter receives a portion of the credit at sight and the remaining is paid by means of bills, or not, depending on the conditions established in the letter of credit signed by the Importer with the guarantee provided by the Issuing Bank; 
  • Negotiable - The advising/confirming bank pays (with or without recourse) the bills drawn by the Beneficiary of the credit and/ or documents duly presented as agreed and advances or agrees to advance the funds to the Beneficiary on the date the reimbursement must be made to the appointed bank, or before.   

The effective granting of the credit operations herein presented depends on the prior appraisal and decision on the credit risk and on the eventual provision of valid collaterals required by the Bank.

How it works

The corporate website of Millennium bcp provides several tools for making Documentary Operations - Credits and Remittances.

This service enables your company to perform the following:

Other Issues

For further information, please contact your Client Manager or use the TRADE LINE MILLENNIUM -
211 130 800, personal assistance in working days from 8:30 to 20:00 GMT.

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