The Credit

The form of payment, which allows eliminating of need of prepayment as well as to minimize risks of non-delivery of goods. 

In addition, using this tool, you can get funding to pay for the goods, i.e. Bank, after checking the documents submitted to it by the Supplier by the letter of Credit, will make their payment. The amount of payment will be deemed a loan, got by you, which will be paid in accordance to the adjusted schedule. 

The scheme of the Documentary Credit with following financing: 

The conclusion of the import contract, providing the letter of credit as a form of payment contractually
The Importer applies to the"Premium Bank" OJSC with a statement for production of the letter of credit, with the following financing, then the loan agreement to the special credit services is concluded.
The "Premium Bank" OJSC issues a letter of credit in favor of the Exporter in condition of payment the documents against their presentation with the content of terms of post-financing. The credit is being advised by the Importer’s directions, and the letter of credit is confirmed, if necessary.
The Exporter ships the goods in accordance of the terms of the Contract.
The Exporter provides the necessary documents (transport, finance) to the nominated Bank (the Bank, which is authorized to check the documents). The documents are checked in accordance to the terms of letter of credit.
If the terms of the letter of credit are in comply with the documents, then the executive Bank pays the Exporter an amount on submitted documents within the limits of the letter of credit.
The executive Bank informs about the payment made, and the letter of credit transforms to credit after payment. The executive Bank informs about the date of credit payment and sends the documents to the"Premium Bank" OJSC to onward transmission to the Importer. The "Premium Bank" OJSC signs a loan contract with the Importer (or accessory contract under the agreement of the credit line) and sends the documents to the Importer.

The realization of goods
Receiving of profit of the products’ realization.
Payment for goods on the letter of credit, payment of the compensation of loan

The letter of credit - the bank's liability of the issuer to pay a sum of money for goods or services, for the transfer of goods or services on the basis of certain supporting documents.

Use of the letter of credit allows to minimize the risks connected with payments under the contract. Receiving the documentary letter of credit, the seller can be assured that as soon as it will put the goods and will give the confirming documents, the party (bank-emitter) independent of the buyer will pay the sum provided by the contract. 

Having received the letter of credit, the exporter checks, whether conditions of the letter of credit coincide with positions of the contract on delivery, and whether it can fulfill all requirements (articles) of the letter of credit. 

If any conditions for beneficiary are impracticable, he should immediately ask to make the buyer changes. In turn, the buyer can be assured that payment will be made only in the event that the documents confirming delivery of the goods in its address, will be given in bank and completely correspond to conditions of the letter of credit. 

Main types of letter of credits: 

confirmed,
irrevocable,
renewed (revolving)
transferable (transferring),
compensative (back to back)

• The Credit
• Guarantee
• Encashment