Lohikäärmeveistokset

Import documentary credit

By using documentary credits you can ensure that you receive the goods safely in accordance with the agreed terms of contract.

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.

A deferred import documentary credit frees up working capital and promotes efficient risk management.
Kati Javanainen‚ sales manager OP

Start by submitting an import documentary credit application to your local OP member cooperative bank. Specify the form and terms of the documentary credit and the required documents.

As a documentary credit constitutes an undertaking by the buyer's bank, its opening requires our normal credit decision procedures and adequate security.

If you company uses a covered documentary credit, which means that your company pays the value of the documentary credit already at the opening stage, your company will avoid currency risks and no other security is required.

A documentary credit is subject to fees in the buyer's as well as the seller's bank. The most common practice is that each party pays the costs of its own bank. According to the Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce (ICC) the applicant of the documentary credit is ultimately liable for all fees/costs, which is why the parties should  agree on the distribution of costs already in the terms of the sales contract.

The terms of the documentary credit are based on the sales contract and can be agreed freely between the parties.  The fulfilment of the terms is verified from the documents required in the documentary credit.

We comply with the ICC's valid regulations for documentary credits in all documentary credits. According to these regulations, banks' actions concern documents only. If the documents fulfil the terms of the documentary credit, the bank cannot decline payment by referring to issues such as deficiencies in the shipment.

Payment at Sight

The buyer does not remit payment until the seller has presented the documents specified in the terms.

Deferred payment/usance

The buyer is allowed payment time and the payment is made after the deadline has passed.

A standby documentary credit is a bank guarantee in the form of a documentary credit whereby the issuing bank guarantees payment to the seller on your company's behalf against the documents required in the undertaking.

In addition, it is often used especially in North and South America and some Southeast Asian countries instead of bank guarantees or to secure regular deliveries.

As a standby documentary credit constitutes an undertaking by the buyer's bank, its opening requires normal credit decision procedures and adequate collateral from the buyer.

A standby documentary credit is subject to fees in the buyer's as well as the seller's bank. The most common practice is that each party pays the costs of its own bank. According to the Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce (ICC) the party opening the documentary credit is ultimately liable for all fees/costs, which is why the parties should agree on the distribution of costs already in the terms of the sales contract.

Standby documentary credits are subject to the valid Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce (ICC).

By using our documentary credit online service, you can speed up the preparation of documentary credit documents and streamline your company's internal processes. The service offers modern solutions for processing documentary credits and transmitting real-time data as well as different kinds of reports for monitoring purposes. The checks made by the application reduce the number of errors.

Through the service your company can open and change import documentary credits. You can also open and change export documentary credits and receive payment receipts and reports directly to your workstation.

To start using the service, sign an agreement on eServices at your local OP member cooperative bank.