Enables you to buy worldwide
The Documentary Credit (DC) (a.k.a. Letter of
Credit), is commonly used for settling international
trade. It offers a payment and fi nancing method
and is a powerful tool for risk management that
also can give your company a competitive edge.
Avoid advance payment
In a DC it is Nordea that guarantees* the seller the
payment. In many cases the DC replaces the need
for advance payment and you can consequently
move the time of payment from advance until after
shipment has been made.
Advance payment is however a common way for
sellers to fi nance their purchases of raw material
and production. With a DC the seller can often
obtain local fi nancing instead of demanding
advance payment from you
Obtain fi nancing
A DC can be payable either directly in connection
with shipment or at a future date.
By offering the seller a DC* you offer him a
security for payment and are thereby better
positioned to also negotiate a credit period, i.e.
a DC with payment at a future date.
Right goods at the right time
Payment under a DC is subject to the seller making
a complying presentation of documents as per the
terms of the DC.
One such term could be the latest date for shipment.
If the goods are shipped later than the date stated in
the DC, the seller has failed to comply with this
term and the issuing bank has the option to refuse
payment. This means that you don’t have to pay for
late shipment of seasonal goods. Another such term
could be place of delivery which ensures you that the
goods are actually delivered to the agreed location.
Documentary Credits for imports
- improving your international trade
*) subject to credit approval.
Nordea Bank AB (publ) Marketing 08.08 (19760003)How it works
First you agree with the seller on the terms of the
contract (1), in this case that settlement will be
made under a DC payable in connection to ship-
ment. You then apply for the DC at Nordea (2) who
issues the DC and send it to the Advising Bank (3).
The Advising Bank advises the D