Documentary trades

Do you sell or buy goods or services? Do you purchase materials for your own production, or manufacture products and sell them? UniCredit Bank specialists will advise you on using documentary trades to secure or finance your domestic and foreign transactions.

UniCredit Bank is a renowned bank for documentary trades in the market. We carefully monitor each of your collections and letters of credit and will inform you of any ambiguities. You can rely on our professional approach and accuracy.

Documentary trades

Instruments reducing the risk associated with your trade

  • If you are dealing with a partner for the first time, do not wholly trust the partner or are concerned about the territorial risks of the country where they operate, use a documentary letter of credit to secure the trade, which is a payment obligation of the bank.
  • If you leave the payment obligation to the buyer, we recommend choosing a documentary collection or bill of exchange collection.

Our expert specialists are here for you

  • We will be glad to prepare training and presentations for you in which we will explain how the individual instruments work and for what transactions they are suited.
  • We will help you to select an efficient means of securing your specific business case.
  • We will provide expert assistance in drawing up payment and delivery terms for a business contract and business documents and in formulating the conditions for successfully executing the trade.

Types of documentary trades

Documentary letter of credit

  • A documentary letter of credit is an obligation by the buyer’s bank (importer).
  • It may be used to secure payments in almost all types of business contracts.
  • Certain risks associated with domestic or foreign trade may be eliminated through a suitable selection of conditions for the letter of credit.
  • For the buyer, a letter of credit represents the security that its bank will pay no money until the seller fulfils the agreed conditions.
  • Quality transaction security improves a buyer’s negotiating position and leads to more advantageous price conditions and longer payment terms.
  • For the seller, a letter of credit will ensure that if it fulfils the agreed conditions, the buyer’s bank will pay it for the delivered goods regardless of the buyer’s momentary payment situation.
  • A letter of credit with a deferred payment date can be sold for immediate cash.
  • Documentary letters of credit are governed by the Uniform Customs and Practice for Documentary Credits issued by the International Chamber of Commerce in Paris, Publication No. 600, 2007 Revision, and the International Standard Banking Practice for the Examination of Documents under Documentary Credits issued by the International Chamber of Commerce in Paris.

An application for taking out a documentary letter of credit may be submitted via online banking.

Documentary collection

  • Documentary collection guarantees the seller that the bank will not provide the buyer with documents entitling it to dispose of the delivered goods until the buyer fulfils the collection conditions, e.g. until it makes payment for the goods delivered by the seller.
  • Documentary collection guarantees the buyer that, once the collection conditions are met, it will be provided by the bank with documents entitling it to dispose of the delivered goods.
  • In most countries, collections are processed in accordance with the Uniform Rules for Collections (1995 Revision) issued by the International Chamber of Commerce in Paris, Publication No. 522.

Other UniCredit Bank products useful in the event of export documentary letters of credit

Assignment of proceeds in the case of a documentary letter of credit

  • An irrevocable commitment by the bank of the beneficiary of the letter of credit (seller) to pay, upon its order, a third party (e.g. a sub-contractor of the beneficiary of the letter of credit) the proceeds of the letter of credit up to the determined amount.
  • Proceeds may also be assigned to several entities, however, only up to the total amount of the letter of credit.

Forfeiting

  • Purchase of the receivable underlying the letter of credit without recourse to the beneficiary of the letter of credit (seller) in the event of insolvency or unwillingness of the issuing bank.
  • A receivable underlying the letter of credit with deferred maturity may be subject to sale. It is conditional upon accepting the documents presented by the beneficiary of the letter of credit and signing a contract with UniCredit Bank.
  • Interest rates are calculated as a sum of the relevant reference rate and interest margin, taking into account the rating (risk) of the issuing bank.

Post-financing

  • Financing of the issuing bank – the buyer’s bank – granted by UniCredit Bank as the bank of the seller – beneficiary of the letter of credit, which may subsequently finance the buyer, i.e. the business partner of the client of UniCredit Bank.
  • Letters of credit are payable on sight; however, UniCredit Bank provides the issuing bank with financing for a period agreed beforehand following the payment of the letter of credit.

The entire communication takes place between banks without the presence of the beneficiary of the letter of credit – client of UniCredit Bank.