Import Documentary Collections (IDC) is a simple and efficient tool for settling your trade debts. It can be used to make payments of any size and in any freely traded currency. However, payment can be made to your suppliers on their immediate presentation of shipping documents.

Dealing With a New Supplier?

Import Documentary collection gives you evidence that goods have been shipped, often including documents of title, example, Bill of Laden.

We can provide a conditional guarantee on behalf of an importer to pay your exporter’s bank, providing all the terms and conditions of the letter of credit are met. The letter of credit provides you with the confidence that all the required documentation will be delivered against payment or commitment to pay. Equally, it provides the exporter with confidence that if all the documentation is provided, they will be paid.

Export Documentary Collection is a form of payment. The exporter instructs its bank to send the shipping documents to the importer’s bank. The documents are then released to the importer according to one of the following procedures:

1. Documents against Acceptance (D/A): the importer’s bank will only release the documents against acceptance of the term bill, which is one of the documents received from the remitting bank. The exporter may also ask the presenting bank to avail the bill.
2. Documents against Payment (D/P): the importer’s bank will only release the documents against payment in full of the amount due.

Export documentary collection is easy to set up. Documents are sent directly to the importer’s bank:

• The exporter will receive payment once the documents have been accepted by the importer.
• The documents presented to the importer are proof that the goods have been shipped.

There are many ways in which a company can finance a trade using trade finance. People often use terms such as stock finance, borrowing base finance or purchase order finance. The main trade finance solution that is usually used and readily available in the market is ‘purchase order’ type of trade finance. This is the standard facility when looking at a trading company – either domestically or internationally.

Purchase order finance is most common when there is a purchase order raised by a buyer and the commitment to fund the corresponding seller by a lender. This can be done in various ways – it could be based on a letter of credit payment terms, payment guarantee, deposit for goods and later payment, payment following credit terms provided by the supplier or cash against documents.

Another well-known trade finance solution is invoice finance. Whilst not technically trade finance, invoices are used to reduce the overall cost of funding to the borrower. The cost of invoice finance is usually lower than trade finance. Thus, an invoice is raised when goods are sent to an end customer and funds are usually advanced against this. Invoice financiers will typically fund between 75-90% of the invoice value and in the event that a trade line is used, then invoice finance will usually be used to pay it back.

Harley Pacific Investments can work with you to identify how reliable your trading partners are and to evaluate the possible risks of insolvency or unwillingness to deliver. We can also advise on payment methods that can mitigate some of these risks. We have a range of financial trade instruments that can help you manage risks in importing and exporting.

A bank guarantee is a type of guarantee from a lending institution. The bank guarantee means a lending institution ensures that the liabilities of a debtor will be met. In other words, if the debtor fails to settle a debt, the bank will cover it. A bank guarantee enables the customer, or debtor, to acquire goods, buy equipment or draw down a loan.

A Proof of Funds is a document demonstrating that the client has a certain financial capacity. Different formats may include bank letters, TELEX or SWIFT confirmations, phone/fax verification, Certificates of Deposit (CD’s), and/or account or custody statements. The purpose of the document is to ensure that the funds required for the transaction are obtainable and legitimate.

Harley Pacific Investments is highly experienced with the provision of funding advice. We specialize in assisting those clients whose existing bank facilities are unable to meet their requirements. Usually, we do not require collateral and no fees are charged without the proper instrument being issued.

A Documentary Letter of Credit (DLC) is a written undertaking given by a bank to the supplier (beneficiary) of goods or services. Letters of Credit are a means for financing international trade by which a bank (the issuing bank) takes the irrevocable commitment, at the request and for the account of its client (the applicant), to pay the exporter (the beneficiary) against the submission of various shipping documents complying with the terms of the credit, such proving the fulfillment of a contractual obligation within a set time limit.

A sight letter of credit is a document that verifies the payment of goods or services, payable once it is presented along with the necessary documents. An organization offering a sight letter of credit commits itself to pay the agreed amount of funds provided the provisions of the letter of credit are met.

A sight letter of credit is thus more on-demand than some other types of letters of credit.