Documentary business

Documentary letter of credit is one of the most important and most widely-used payment and security instrument in export and import finance. It provides the seller and the buyer with a high degree of security against risks.

The Documentary collection is an instrument used for settling foreign trade payments. The seller and the buyer know each other as reliable partners, who have always met their obligations. The economical and political situation in the buyer’s country is stable, and there is no danger of exchange control or import restrictions.

A guarantee is the irrevocable obligation of a bank to pay a specified beneficiary on the beneficiary’s demand. A guarantee is a security instrument – it provides the beneficiary with access to a sum of money in case of its partner’s default.

• Credit Facilities Guarantee.Purpose of such a guarantee is to secure any claims by the lender on the borrower due to a credit (loan, etc.) not being repaid in accordance with the terms of the contract.
• Payment guarantee- this guarantee ensures fulfillment of the buyer’s payment obligations as provided for in the contact. It is based on the terms of payment under the contract and covers the risk of default (or delay in payment) on the part of the buyer.
• Advance payment guarantee- is a guarantee for the return of a down payment made under the terms of the contract in the event that the seller fails to deliver goods or perform work. The guarantee becomes normally valid as soon as the advance amount is credited to the seller’s account in the guarantor bank. The guarantee amount is decreased as the seller performed his contractual obligations covered by the advance.
• Bid bond (Tender guarantee) - the bid bond is a guarantee ensuring that a participant in tender fulfills its tender obligations to clients or contractors, namely that a tender participant:
  • shall not recall its bid within the period of bid review;
  • shall, having won the tender, sign a contract with the client/contractor and provide the latter with appropriate performance guarantee.
• Performance guarantee- the performance bond is a guarantee securing the high-quality performance of the seller’s contractual obligations.