A Documentary Credit (also known as a letter of credit) is an irrevocable undertaking issued by a bank at the request of an importer to make payment for goods to an exporter upon presentation of specified documents that comply with all terms and conditions stipulated in the Documentary Credit.
From the exporter’s perspective, the Documentary Credit transfers any payment risk from the importer to ANZ. It is considered to be the most reliable and secure way that an importer and an exporter can protect their interests and minimise their respective risks in a trade transaction.
Benefits for importers
- Enables an importer to enter into a trade by reducing certain risks, including the risks of their goods arriving late or not meeting the importer’s specifications
- Assists an importer with financing the purchase of goods in a way that matches up with the importer’s domestic cash flow requirements.
Benefits for exporters
- Documentary Credits are regarded as the most acceptable means of credit risk control and payment throughout the world for the sale of goods between traders in different countries
- Provides an exporter with the option of obtaining pre-shipment finance or post-shipment finance to help the exporter satisfy their working capital requirements
For more information on ANZ Trade and Supply Chain Finance solutions please contact the Trade Finance Desk via e-mail or phone 1300 269 487.
For more information on how ANZ can help you grow your business internationally please visit the ANZ Be Trade Ready site.
ANZ Trade Terms (PDF, 245kB)
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