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Documentary credit

A documentary credit is an excellent method of payment when a foreign seller requires collateral before manufacturing begins or needs financing for the production. In some countries the seller can pledge the documentary credit to acquire raw material. 

As the buyer you give Nordea instructions on opening a documentary credit. When Nordea opens a documentary credit, we undertake to pay the seller, provided that the terms and conditions of the documentary credit are fulfilled. The terms and conditions will be determined on the basis of the trade agreement you have concluded with the seller. 

Via Trade Finance Net Services you can send Nordea documentary credit instructions electronically and receive information on your import documentary credits. 

Import documentary credit - factsheet for importers

Your benefits

Manage the flow of goods with the terms and conditions of the documentary credit: 

  • You can easily get a longer term of payment by offering an import documentary credit as the method of payment. 

  • As the buyer you can make sure that the goods have been shipped before you have to pay. 

  • The ICC Uniform Customs and Practice for Documentary Credits adds security to your trading. 

 

Application 

Since an Import Documentary Credit is a credit service it will require the credit approval of Nordea. If your company (as a buyer) wants to open a Documentary Credit you need to send in an application to your home Nordea branch. The form must be filled in completely including a description of the goods. The application form can be found in the right column. 

You can also apply for an import documentary credit electronically via Nordea's Trade Finance Global.

Import standby letter of credit

Security in foreign trading

Offer your trading partner a standby documentary credit issued by Nordea to secure the fulfillment of your company's obligations under the agreement. This way your trading partner knows that you are a reliable cooperation partner. 

Your company can also request a standby documentary credit from the trading partner so that you can be sure that your partner will act as specified in the agreement. Collateral issued by the bank provides security to your company, especially when the trading partner is not well known. 
Use standby documentary credits for managing your company's foreign trade risks.

By offering a standby documentary credit to your trading partner as collateral for payment: 

  • You may not have to pay an advance payment. 

  • It may be easier for you to get a term of payment.

You can request a standby documentary credit issued in favour of your company if you, for example, are engaged in long-term trading. Then you do not need to re-negotiate the terms and conditions for each shipment. 

  • Avoid or secure advance payment 

  • Obtain credit 

  • Secure compensation for non-fulfilment of important obligations 

  • The banks involved will act according to the internationally accepted rules of the International Chamber of Commerce *(Issuance requires the credit approval of Nordea)

Standby Letter of Credit Amendment

Get in touch 

For more information about how we can support your business contact your Nordea adviser.