Export letter of credit discounting

Great opportunity to lower Your business risks and receive financing – use letters of credit with deferred payment undertaking!

Upon buyer‘s (importer‘s) request buyer‘s bank will issue letter of credit, i.e. commitment to pay the seller (exporter) agreed amount at a future date as soon as the exporter ships the goods and presents to the bank letter of credit terms and conditions complying documents. As soon as documents required by the letter of credit are presented to the bank, You may request „Swedbank“ to discount presented documents, i.e. to pay You the value of documents in exchange to the right to claim payment under mentioned letter of credit.

Export letter of credit discounting – usefulness to the seller:

  • Additional financing could be received;
  • Risk of bad debts is lowered;
  • Possibility to prolong payment terms to the buyers.

Course of the letter of credit with discounting

  1. Seller, through his bank, receives letter of credit issued in his name.
  2. Seller presents letter of credit terms and conditions complying documents and „Swedbank“ receives paying bank commitment to pay amount of presented documents on the agreed deferred payment date.
  3. „Swedbank“ evaluates the risk of a bank paying under letter of credit.
  4. in case the risk of a paying bank is acceptable, „Swedbank“ discounts letter of credit documents, i.e. seller receives value of documents less respective fees and commissions from „Swedbank“.
  5. On due date „Swedbank“ receives payment under letter of credit.

Information regarding potential risks

If in case of financing „Swedbank receives a notice from the bank paying under letter of credit, that such payment will not be effected due to the court decision or arbitration process, or other situation arises, when receipt of money by „Swedbank“ under letter of credit becomes questionable or impossible, „Swedbank“ retains the right to claim back financed amount in exchange of returning the right to claim payment under letter of credit.

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