The illustration below shows the steps involved in the documentary credit process from start to finish. Contact us for more information.
Documentary credit process
- The contract is made between the importer and the exporter.
- The importer asks its bank to issue a documentary credit to the exporter.
- The importer's bank sends the documentary credit to the exporter's bank (advising bank).
- The exporter's bank advises the exporter of the issue of the documentary credit.
- After dispatch of the goods, the exporter delivers the required documents to its bank, which examines them with respect to the conditions of the documentary credit. If the requirements have been complied with, payment will usually be made to the exporter.
- The exporter's bank sends the documents to the importer's bank against payment.
- The importer's bank delivers the documents to the importer against payment, after which the goods may be handed over.