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Documentary letter of credit is a promise of the Bank to pay the Beneficiary at the expense of its customer a certain amount in the agreed currency, if the seller (Beneficiary) submits within the prescribed time the documents that meet the conditions Letter of Credit and confirm the shipment of commodities (the provision of services).
it is applicable as a security instrument in transactions to almost all countries of the world;
it is convenient for advance disposal of the amount due to the seller;
it is flexible in terms of payment being a reliable instrument;
it is suitable as a short-term financing facility;
quickly and easily makes a payment that allows the seller under certain circumstances to receive good discounts;
has international legal reliability.
A guarantee is a written undertaking of the bank to pay the creditor (beneficiary) a guaranteed amount on receipt of a request in writing, which confirms that the debtor (principal) has failed to meet its liabilities under the terms and conditions of the guarantee that has been issued according to underlying contract between beneficiary and principal. Exercise of guarantees has international legal reliability as well.
Applying for Guarantees is best when:
When there is lack of confidence in the solvency of your business partner, the payment guarantee is very useful tool;
When it is important to secure the proper performance of your undertakings to business partner, you can use the performance guarantee;
When you are not certain, whether the advance payment to the business partner will be utilized for designated purposes, you can exercise the advance payment refund guarantee;
When as a bidder (according to bid requirements) you are required to provide the owner of bid with bid bond (or bid guarantee) to assure that you have the financial means to accept the job for the price quoted in the bid.
Our specialist will answer you within a working day. Due to the high number of requests during the COVID-19 pandemic, there may be some delays in responding to requests.