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The documentary credit is the transaction by which a bank (the “Issuing Bank”) undertakes to order and on behalf of its importing client (the “applicant”) to pay to a exporting third party (the “Beneficiary”) within a specified period via an intermediary bank (the advising bank) a certain amount against delivery of strictly compliant documents justifying the value and shipping of the goods. It is subject to the rules and customs uniforms of the International Chamber of Commerce.

Mandatory informations

What elements must be included in the opening of a documentary credit?
Names and addresses:

  • of the applicant
  • of the beneficiary
  • of the advising bank

if any, of the confirming bank Amount of credit Designation
of goods List of documents Conditions of sale Validity …

Terms and conditions

  • An Irrevocable Credit : represents a firm commitment by the issuing bank (can only be modified or cancelled with the agreement of all parties)
  • A Revolving Credit is a documentary credit whose amount and duration are automatically renewed without the need to modify the credit. ….


The 13 Steps

1: Instruction to open the documentary credit 
The buyer and the seller have agreed to the contract for the sale/purchase of goods or services.
This raises the issue of payment security. If the documentary credit has been chosen by mutual agreement, the buyer gives the opening instructions …

Issues with documentary credits

Important considerations 

  • The complexity of operations

  • The involvement of a company’s various departments

  • An administrative complexity that leads to significant load breaks within the documentary chain

  • The strictness of procedures (13 different operations)

  • A lack of task automation


An export documentary credit transaction is prepared upstream, as soon as the negotiation takes place commercial with his client. Recall that the bank will refuse payment if the terms and conditions conditions of the documentary credit are not respected. Here are the steps necessary for good workflow: 1) Negotiation of the terms and conditions of the documentary credit : Type of credoc Terms of use (choice of …

Discrepancies and reserves

How to reduce its bank reserve ratio ? The constant effort of exporters to train their operational staff, using training organizations, consultants, and even their banker, is apparently not enough, according to the statistics of the ICC. Indeed, 2/3 of documentary export credits would present irregularities at the time of their use. These dysfunctions in the “Financial …

State of the art review

The “business software” market for credit management documentaries, is composed by very few actors due to its technicality. Some editors of “vertical” software packages (specialized in a sector of activity) or dedicated to logistics include in their offer a module “documentary credits” very roughly problems related to this type of operation. Gates …