IMPORT DOCUMENTARY LETTER OF CREDIT
An import documentary letter of credit is a formal undertaking by Westpac to pay your supplier, provided they meet the terms and conditions of the documentary credit.
Import documentary letter of credit at a glance
- We receive the documents from the seller's bank and check to ensure they comply with the terms and conditions of the credit. The documents will then be released to you for collection of goods.
- Internationally accepted rules apply as determined by the International Chamber of Commerce (ICC)
- You specify documentation to accompany each shipment
- You nominate the deadlines for shipment issued on a 'sight' or 'term' basis: sight means that drafts are drawn for immediate payment, term means that drafts are drawn on a term payment basis - e.g. 30 days after sight, 90 days from bill of lading.
Apart from being a secure form of payment this facility may help you:
- Establish credit worthiness with your supplier
- Control payment terms and conditions.
Know the risks
- Banks deal in documents only – you are still reliant on the standing of your supplier and their ability to manufacture/ship goods in terms of the quality required
- The import documentary letter of credit is a separate legal document to your sales contract.