Trade Finance

Documentary Credits

Documentary Credits – also known as Letters of Credit (LCs) – are the surest way of ensuring payment for goods imported or exported. So long as the terms and conditions of issue are adhered to, that is.

How do they work?

• LCs are a safe and versatile payment mechanism for international trade
• They facilitate business with new or unfamiliar trading partners
• They are issued to meet the requirements of the International Chamber of Commerce’s Uniform Customs and Practice Standards for Documentary Credits
• They are irrevocable – unless there is agreement to revoke by all parties.

LCs from Lombard benefit the Importer by:

• Offering a conditional bank guarantee of payment to the supplier, thus helping you negotiate better terms
• Being accepted internationally
• Offering deferred payment when issued at term, which can therefore ease pressure on cash flows
• Providing additional protection when an importer requires specialised documentation, such as an inspection or quality certificates issued by a third party.
• Grant right of refusal if any of the conditions of the LC are not met.

LCs from Lombard benefit the Exporter by:

• Guaranteeing payment (so long as the seller can present the documents required, within the LC's validity period)
• Having the bank authenticate the LC issued by the buyer’s bank
• Giving you the possibility to raise finance on the strength of the LC.

Documentary Collections

Documentary Collections are a simple and cost-effective solution for trading partners, particularly within a well-established relationship. They allow both the importer and exporter to maintain a certain level of control over the goods at hand, while also speeding up the process of the exchange of goods and funds, which, ultimately, benefits both parties.

How do they work?

• The typical documents that make up a collection include a bill of exchange and other shipping documents, namely the invoice, transport document and insurance policy, all of which are needed for taking delivery of the goods
• Documents are only released in exchange for immediate payment or against acceptance of a bill of exchange.

Exporters should note that:

• We will forward your shipping documents to the importer’s bank for collection of payment
• As an exporter, you should ensure that all documents are in order so as to facilitate importation of goods to the other country
• The prerogative of retaining control of goods until payment or acceptance is made is within your remit.

Importers should note that:

• We will notify you when the shipping documents have been received, along with the terms and conditions of the collection
• You can and should review the documents before payment or acceptance of the bill of exchange
• Once payment is effected, we will send the funds to the exporters in accordance with their instructions.

Guarantees

Whether it is a performance, advance payment, tender or financial guarantee, we will always structure and tailor our solution to your specific requirements. Our guarantees may enable you to negotiate better business terms with your trading partners. Issue of guarantees may be subject to credit assessment.

How do our Guarantees work?

• Our Payment Guarantees ensure payment to your suppliers for goods and services provided and apply to both import and export businesses. Since this is a guarantee of payment, you will not need to make any pre-payments either and it also improves your credit standing with your suppliers, thus making it possible for you to receive goods prior to effecting payment.
• Our Tender Guarantees, also referred to as Bid Bonds, are suitable if you’re looking to submit a tender for services, supplies or works. For the receiver of the service, work or supplies, this guarantees compensation should you wish to opt out of the tender after being accepted or if you withdraw your tender bid, making your bid stronger and more reliable.
• Our Advance Payment Guarantees are the perfect option for those who normally make advance payments for goods or services and apply to both import and export businesses. These guarantee repayment of advance payments should the supplier fail to meet his part of the agreement and provide an element of protection to the importers who trade on open-account terms.
• Our Performance Guarantees are ideal if you are looking to expand your business, as they support your ability to perform according to your contractual obligations. They apply to both domestic and import-export businesses and secure claims by the buyer or the seller that emerge in delivery or performance.
• Our Guarantees Securing a Credit Line offer borrowing customers a guarantee on their liability by a bank and secure claims by the lender on the borrower in terms of credit, including loans and overdrafts.

Receiving International Payments

The easiest and most secure method to receive payments from abroad is to use bank-to-bank electronic money transfer.  Should the payment be sent from anywhere in the EEA, your payment will be visible no later than the business day following that on which the transaction was affected.

What do I need to provide the payer for a Money Transfer to be affected?

• The SWIFT BIC address of Lombard, which is LBMAMTMT
• The name of your branch
• Your account name and full address
• Your IBAN number
• Reference and/or details (e.g. your invoice number(s))

Good to know! Your IBAN number can be found on your latest statement.  If you are new to Lombard and haven’t received a statement yet, you can generate your IBAN from here.