Upon shipment of goods, the exporter presents related documents to the Bank for negotiation. Negotiation means discounting the bills against advances to the beneficiary exporter. The Bank checks the documents presented against the terms and conditions of the LC in order to determine compliance before negotiation. Negotiation is done with recourse to the beneficiary unless LC is confirmed. A credit trade line is required before this facility can be utilized.
Payment guaranteed by the Export LC Issuing Bank
Certainty – buyer cannot cancel/amend without your consent
Clear requirement for payment
Added protect ion – LC Confirmation
Pre and Post Shipment Financing
This is a short term financing facility extended to exporters prior to shipment of goods. This facility enables the exporter to enjoy pre-export financing for the purchase of the goods provided a firm order is secured by the exporter. The application has to be supported by a Letter of Credit in his favour or a Confirmed Purchased Order. The loan approved will only cover the costs of goods for export or a percentage of the LC submitted. A credit trade line is required before this facility can be utilized.
Important cash flow avenue for exporters to manufacture finished goods
Flexibility of the financing period
Outward Documentary Collections
This is where the exporter collects payment from his overseas buyer (the importer) through the Bank. After the shipment of goods, the exporter entrusts the trade documents to the Bank, with specific instructions and terms for the goods release to the buyer. The Bank releases the documents to the buyer only when he meets the payment terms, either by D/A (Documents against Acceptance) or D/P (Documents against Payment).
Trusted agent (bank) to handle in collection
Fast receipt of documents
Cheaper than LC
Cut-off time at 4pm allows greater flexibility (Monday to Friday, excluding public holidays)