Trade finance

This is the way in which an exporter requires an importer to prepay for goods ship. The importer wants to reduce risks by asking the exporter to document that the goods have been shipped. The importer´s bank assists by providing a letter of credit to the exporter (or the exporter´s bank) providing for payment upon presentation of certain documents, such as a bill of lading. The exporter´s bank may make a loan to the exporter on the basis of the export contract.

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