Trade financing
We create guarantee and settlement instruments as well as structured forms of financing that are used in local or international trade.
A documentary letter of credit is a payment instrument used in international trade. It is a safe payment method for two parties in a business transaction as it creates a balance between the opposing interests of the buyer and the seller who know each other poorly or not at all.
- Under this method of payment, the issuing bank effects payment to the beneficiary (seller) at the request and for the account of the applicant (buyer) within a given time frame if the required documents are submitted and if all letter of credit terms are met.
Guarantees are an instrument for protection against the risk of default on previously agreed contractual obligations, especially when two business partners are working together for the first time or when they do not know each other well.
- A bank guarantee may be requested by the seller (in favour of the buyer) or by the buyer (in favour of the seller).
- Most bank guarantees are “upon first call”, meaning that if the principal’s contractual obligations are not met the bank pays the guaranteed amount to the beneficiary without any objections provided the latter meets the conditions specified in the guarantee.
Documentary collection is a payment instrument that ensures a higher level of payment safety than the free transfer of funds.
- Suitable for domestic as well as international payment transactions. The bank does not guarantee the payment, but it does ensure that the payment is effected and that the documents are accepted.
- For customers who know and trust each other and who have well-established business flows.
- Documentary collection is a suitable instrument of payment security when there are no doubts about the buyer’s willingness to pay. There are two types of documentary collections: import and export.
In executing an export transaction, the price, quality, knowledge, delivery term and after sales services are not the only elements that are essential. What is also extremely important is how it’s going to be financed. UniCredit Bank offers financing at competitive prices.
We offer the following forms of trade financing:
- Factoring.
- Letter of credit post-financing for a deferral of payment by letter of credit.
- Purchase of letter of credit receivables.
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