Export Documentary Credit Comparison

Find a solution to meet your requirement

Export Documentary Credit Comparison

Find out which one works best for you

A Documentary Credit (DC) can be confusing. Even after you have decided to use a DC, you still need to decide which type best suits your needs.

At its most basic a DC is an undertaking by a bank to make a payment, provided the terms of the credit are met. It is a promise to pay.

The main distinguishing feature among the various types of DCs is that some are more suited to transactions involving middlemen or traders.

Below is a quick reference guide to choosing the most common types of DCs.

	Documentary Credits	Back-to- Back DCs	Transferable DCs	Standby DCs
Specific to transactions involving traders	No	Yes	Yes	No
Buyer requires credit facility to issue DC	Yes	Yes*	Yes	Yes
Degree of freedom to specify terms of DC	High	Medium**	High	High
Supplier guaranteed payment if terms are met	Yes	Yes	Yes	Yes
DC issued on a transaction by transaction basis	Yes	Yes	Yes	No
Ease of supplier to obtain finance	High	High	High	High

* Yes, but terms may be better due to support of 'Master' DC.
** Medium (some terms to follow 'Master').

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