Documentary trade financing is a flexible and profitable means of developing export transactions, allowing our customers to:
- Receive favourable financing terms for up to 100 per cent of the contract value
- Minimise risk for their company and partner companies abroad, including risk of non-payment and failure to deliver etc
- Optimise trade operations with international partners by using documentary collection.
Advantages of Nordea Bank documentary trade financing:
- Broad spectrum of financing options:
- Commercial letters of credit in foreign currencies and Russian roubles (with post-financing or discounted deferment of payment, immediate settlement, with or without confirmation by foreign banks according to vendor requirements, discounted export letters of credit etc)
- Guarantee instruments: direct bank guarantees on behalf of foreign vendors, first-class foreign bank guarantees against Nordea Bank guarantees, standby letters of credit, contract performance guarantees, guarantees on behalf of Russian federal customs agencies, prepayment guarantees etc
- Clean and documentary encashment
- The type of financing instrument and method of payment for trade operations are determined with the consent of foreign trade partners.
- Tailored approach for each customer, including set limit of financing:
- Option to choose optimal method of payment for export contracts in accordance with type of customer business, as well as trade partner
- The credit limit for offered trade financing can be set prior to opening of a Nordea Bank business account
- All business turnover in other bank accounts is taken into consideration when setting credit limits; and
- Businesses that are part of holding companies or have subsidiaries may set a general financing limit for the entire holding or establish financing limits on each individual business based on total turnover for the entire group.
A letter of credit (LC) is a guarantee of your payment according to contract upon delivery of goods (or services) allowing for immediate payment against documents or necessary deferment of payment. An LC is your option to produce payment according to contract only after counteragents have fulfilled all obligations in regard of quality of provided goods (or services), deadlines and other contract terms.
Advantages of letters of credit:
- You have no limit in financing contracts to purchase goods from foreign manufacturers (raw materials, supplies and merchandise), as well as equipment and services from foreign partners, such as installation and start up of equipment, personnel training, engineering and consulting
- Your foreign partners receive 100 per cent of the payment according to contract terms upon delivery of goods and services and do not need to extend their own commercial credit or deferment of payment, thus reducing expenses
- Your risk of currency depreciation and commercial risk are reduced by conducting transaction with foreign providers of goods and services.
A bank guarantee is a guarantee of your contractual obligations in respect of foreign partners with regard to delivery, payment of goods, return of advance etc.
Nordea Bank payment guarantees are immediately recognised by the majority of large foreign exporters. If required, obligations can be secured by a standby letter of credit confirmed by a first-class foreign bank.
Contract VAT and customs duties can, if needed, be financed by the bank with the credit line opened for your business.
We also offer Nordea Bank guarantees on behalf of customs agencies to pay customs duties and fees.
Advantages of bank guarantees:
- The cost of servicing guarantees is significantly less than the cost of bank lending
- You can independently plan purchases and payment with suppliers, provided your liabilities do not exceed the value of the bank guarantee
- The expansion of your company’s foreign trade operations opens new international markets and enlarges your circle of foreign partners
- Improve your reputation as a reliable partner by using guarantees to demonstrate your ability to meet payments
- Bank guarantees provide favourable conditions on which to work with your suppliers — receive or extend payment deferments from manufacturers, increase the procurement volume of goods and receive additional discounts for purchased products.