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Documentary Operations

In international trading, documentary operations protect exporters and importers from the risk of one of the parties to the transaction not fulfilling their contractual obligations and duties. Documentary operations mean that the bank is obliged to ensure appropriate and accurate documentation of the exported or imported goods during the turnover and settlement process.

• Document encashment

Document encashment operations are the collecting of money from a buyer against documents, with the bank’s mediation. This operation takes place on the basis of instructions from the seller, indicating the terms for the money to be collected.

As a mean of settlement, document encashment permits the buyer to choose whether or not to pay for goods. It has the right to refuse to pay for goods or to pay a smaller amount if the goods are not delivered in accordance with the regulations of the set contract. The buyer does not have to make a prepayment on goods, only against the documents guaranteeing delivery of the goods in accordance with the regulations of the set contract.

For its part, the seller is given a guarantee that the documents will only be transferred to the buyer in exchange for payment for the goods or a promissory note. The bank’s customer does not have to worry about how to receive the money – this is done by the bank, which transfers the money owed to the customer’s account.

• Letters of credit

A letter of credit is a guarantee issued by the bank at the request of a purchaser to pay the seller a set amount of money upon receiving documents complying with the regulations of the letter of credit.

The purchaser shall ask its bank to issue a letter of credit, which will guarantee its repayment obligations. Settlement by letter of credit protects the interests of both importers and exporters.

The main difference between a letter of credit and document encashment is that payment against the documents is undertaken by the importer’s bank rather than by the importer, on condition that these documents fully comply with the regulations of the issued letter of credit.

The importer is the initiator in the process of issuing a letter of credit and is responsible for submitting precise instructions to the issuing bank so that the issued letter of credit complies with the issued transaction contract.

• Guarantees

Guarantees are an undertaking by a third party (in this case the bank) to take on obligations in the event that the party in whose name the guarantee is issued does not fulfill its obligations toward the recipient of the guarantee.

Guarantees are used to secure a wide variety of contractual obligations, thereby protecting the interests of both the seller and the purchaser and any other contracting party.

AS "UniCredit Bank" offers its customers various types of guarantees, for example repayment guarantees, offer security guarantees, fulfillment guarantees, customs guarantees, and advance payment guarantees.