Import documentary credit is a payment method where OP as the issuing bank undertakes to remit the payment to the seller on behalf of the buyer (your company). To receive the payment, the seller must present the documents specified in the terms of the documentary credit to its bank during the validity of the documentary credit.
Your company gets several benefits by using import documentary credits:
- You can get payment time and enhance your working capital management.
- You can ensure delivery on time and receive the documentation needed for imports.
You can prove your payment capacity and creditworthiness as a buyer by opening a documentary credit.
A documentary credit is a safe payment method: as a buyer you are obligated to pay only if the terms of the documentary credit are met. A covered documentary credit also hedges against currency risk.