Documentary credit

Do you have a lot of international transactions? Documentary credits offer exporters security of payment. Importers, meanwhile, can be virtually certain that they will only have to pay for the goods if they match the order and have been delivered within the agreed period, as demonstrated by the presented documents.


What is the Documentary credit?

Documentary credits help you through the difficult period between delivery and payment of an international goods shipment. If you're the importer, you don't have to pay for the goods until they've been delivered in compliance with the contract and you've received the documents specified in the documentary credit to show that this is the case. If you're the exporter, you are protected by the guarantee provided by your customer's bank. 



  • Certainty of payment: the purchaser asks its bank to provide a written payment undertaking, which is separate from the underlying commercial transaction.
  • Guaranteed delivery of your goods: it's up to you to decide which documents must be presented to the bank (invoice, insurance certificate, waybill, etc.) to demonstrate to your satisfaction that the terms of the documentary credit fully reflect the provisions of the contract.
  • Security: the bank ensures the security of the transaction.


Get full details

Do you buy and sell regularly on the international market? If so, you'll know all about the delicate period between the placing of an order, delivery of the goods and payment. If you're the supplier, you naturally want to be paid as quickly as possible. And if you're the purchaser, you expect to receive the goods as ordered and within the agreed period.


Documentary credits square that circle. They are an instruction to the purchaser's bank to pay the supplier as soon as a series of conditions have been met. They offer both parties a guarantee that the initial transaction will be completed in the agreed manner.


Once issued, documentary credits can't be revoked: the payment commitment cannot be modified or cancelled without the vendor's consent. Documentary credits might be confirmed by a second bank, mostly located in the vendor's country, which adds its own, independent undertaking, in terms identical to those of the bank that issued the credit. This confirmed' credit provides the vendor with maximum security.

Every international transaction by documentary credit has at least eight stages. This approach guarantees delivery to the purchaser and payment to the vendor, if all the terms of the documentary credit have been respected.

  1. Purchaser and vendor sign a sale contract, one article of which requires a documentary credit to be opened in favour of the vendor.
  2. The purchaser applies to its bank to open a documentary credit, in which it sets out all the conditions on which the credit should be issued in the supplier's favour.
  3. The bank receiving the purchaser's instructions issues the documentary credit in favour of the vendor.
  4. A third-party bank – the ‘correspondent' of the issuing bank in the vendor's country – may confirm the credit on the issuing bank's request or authorisation.
  5. The vendor receives the documentary credit and dispatches the goods according to the specified conditions.
  6. The vendor submits all the necessary documents to the confirming bank. The latter credits the vendor in the specified way, provided that the documents comply with the terms of the documentary credit.
  7. The confirming bank sends the documents to the issuing bank, which settles its debt with the confirming bank, having performed a supplementary check of the documents.
  8. The issuing bank presents the documents to the purchaser and receives from it the amount deposited with the confirming bank according to the terms agreed on issue of the credit.

Three parties are involved in every documentary credit: a purchaser (applicant), a vendor (beneficiary) and an issuing bank. A third-party bank (confirming bank) is sometimes called on to confirm the credit.


As soon as the confirming bank or the issuing bank has accepted the documents based on their compliance with the terms of the documentary credit, it goes ahead with payment. The different documents that might be required by a documentary credit to support the terms of the contract include:

  • Commercial documents: invoices, inspection certificates, customs documents, packing lists, measurement certificates, etc.
  • Transport documents: waybills, bills of lading, courier receipts, etc.
  • Insurance documents.


The commercial terms (Incoterms) are a key element of international sales contracts, as they specify how the costs and risks are to be shared between the parties. The rules governing documentary credits are the Uniform Customs and Practice for Documentary Credits (UCP).

You can request the issue of a documentary credit online using our Click 'n Trade tool. This allows you to track the status of your transactions in real time and find out quickly when you will take delivery of the goods and when you will need to pay the issuing bank.


Lender: BNP Paribas Fortis SA/NV, Montagne du Parc 3, B-1000 Brussels – RPM/RPR Brussels – VAT BE0403.199.702. Subject to approval of your application.

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