IMPORT-EXPORT SERVICES
Our import-export department is committed to making your transactions with international partners easier and more secure. Experienced and conscientious advisors provide all the support you need.
Letter of credit
Letter of guarantee
Documentary collection
Letter of credit
When you ask National Bank for a letter of credit, you have the assurance that the Bank will make available to the beneficiary the amount agreed to by both parties, in compliance with the terms and conditions of the documentary credit agreement. A letter of credit is often required for the payment of goods or services that are imported or exported, because it is a very secure method of ensuring payment.
Documentary credits for every need
The bank that issues a revocable documentary credit can modify or cancel it at any time without having to notify the beneficiary (seller/exporter). A company’s head office may opt for this type of letter for its transactions with one of its subsidiaries. However, the bank agrees to honor documents negotiated before the notice of change or cancellation.
An irrevocable documentary credit cannot be changed or cancelled without the consent of all parties concerned: the banks, the beneficiary (seller/exporter) and the applicant (buyer/importer).
The value of a documentary credit is based on the issuing bank and the country in which it is issued. When its value seems uncertain, the beneficiary (seller/exporter) may require that the documentary credit be both irrevocable and confirmed.
The advising bank -- generally the beneficiary’s (seller/exporter) bank -- is requested by the issuing bank to confirm the documentary credit. If the bank agrees, it then undertakes to pay the beneficiary (seller/exporter) on presentation of documents that comply with the term and conditions of the documentary credit, regardless of any financial uncertainty surrounding the issuing bank and its country. The cost of confirming the documentary credit is generally borne by the beneficiary (the seller/exporter).
Special documentary credits
The simplified letter of credit is designed for small or medium enterprises that often do business with the same supplier. It applies to amounts of less than $65,000.
With all the features of the conventional documentary credit, the simplified documentary credit offers greater flexibility. Because only two documents (a commercial invoice and a shipping document) are required, the documentary credit can be processed faster.
With a transferable credit, the original beneficiary (or first beneficiary) may act as an intermediary and transfer its rights under the documentary credit to a second beneficiary, who is generally the actual supplier of the goods or services.
A documentary credit is transferable only if the issuing bank has duly specified so in the credit. The notation “transferable” must be clearly indicated in the text of the documentary credit. Furthermore, this documentary credit authorizes only a single transfer to one or more beneficiaries.
In other words, the rights of the second beneficiary cannot be transferred to a third beneficiary.
[ top ]
Letter of guarantee
In your international transactions, you may at times be obliged to make certain commitments to prove your creditworthiness.
For such transactions, our experts offer various types of guarantees to reassure your trade partners that you'll meet your specific obligations.
A bank letter of guarantee is a document by which the bank makes an irrevocable commitment to compensate your client if you are unable to honour you obligations to pay the client or provide the client with the required work or services.
The commitment undertaken by the bank at your request is completely independent of the contract binding both you and your client, although it may make reference to it. In essence, the bank substitutes itself for you in order to guarantee payment to the beneficiary. The strength of the guarantee is certification that a default or deficiency has occurred, on your part, in fulfilling the contract.
A letter of guarantee for every situation
A bid bond guarantee may often be necessary when you want to respond to a call for tender for a construction or supply project. It is a strong indication that your tender can be taken seriously.
For instance, if you were to withdraw your tender and refuse to accept the contract or to supply a performance bond as generally required, the beneficiary of the bank guarantee would then be compensated and could issue another call for tender.
Once a contract is awarded, often the buyer might want to be protected against failures through the issuance of a performance bond. The performance letter of guarantee is preserved to protect your client against project deficiencies.
Should there be any deficiencies, the funds obtained through the guarantee could be used by the buyer for repairs, or to complete unfinished work.
If the buyer has given you an advance, you may be required to repay it if the transaction breaks down. With an advance payment guarantee, the buyer is assured repayment of such an advance.
The letter of guarantee can be adapted to many different situations.
It is useful whenever a sales contract requires an endorsement, or for example, when a head office must guarantee a subsidiary.
The letter of guarantee reduces the financial uncertainty or other potential risks associated with dealings on an “open account” basis or with a subsidiary.
The standby letter of credit originated in the United States, where banks were prevented by law from issuing letters of guarantee. It is used to cover the various payment commitments your U.S. suppliers may require or you may require from U.S. clients. That is, the delivery of goods or services will take place and the supplier will invoice directly.
A drawdown is made through the standby letter of credit only if an invoice is not paid (i.e. payment default). In many cases, a standby letter of credit may replace conventional letters of credit that necessitate the issuance of a separate letter of credit for each shipment.
[ top ]
Documentary collection
Bank assistance to simplify collection
Eliminate complications related to foreign collections. Acting on your instructions, our International Collection department will process your commercial documents, such as shipping documents and invoices, or your payment documents, such as cheques, bills of exchange, promissory notes and other items. Not only can we obtain acceptance or payment through our correspondents but we can also provide you with direct collection services (depending on your volumes).
From the comfort of your office, you can use our preformatted forms to speed up processing and minimize delays with your suppliers.
[ top ]
|
