You export or import of capital goods, equipment and you have a regular flow of business with the same buyers or sellers. A possible answer to your need is a Standby letter of credit or SBLC.

The standby letter of credit or SBLC is the irrevocable commitment of the bank to compensate the beneficiary in the event of default of payment of the debtor. SBLC are designed according to what the International Stand-By Rules And Practices or ISP98 establish.

SBLC guarantee the exporter to receive payment for the merchandise if the importer does not comply with its responsibility. SBLC are attractive for exporters not only because of what was stated before but also because of its easy way to use and manage. However, it is mostly recommended for transactions between commercial partners that have already worked together in repeated occasions.

When SBLC have past their expiration date, they can be cashed immediately by the holder. The exporter will have to show the documentation that proves that the transaction was done different from what the letter establishes (a copy of the invoice, one of transport, certificate of non-payment, etc)

Some of the advantages of SBLC are:

They are a simple guarantee for the exporter to show to the importer commitment of compliance. The importer also commits to payment of the merchandise and reimbursement when something is flawed.

Flexibility. The contract will determine when the buyer has rights over the merchandise and when he or she is to be paid. The seller needs to show the appropriate documents to the buyer. Once it is cleared, the bank will honor the payment and it will be send to the exporter. This process allows facilitating the process of clearance.

SBLC will not be traduced into a great deal of transactions and will therefore be less expensive than letters of credit. The exporter will pay a commission for the fright and that is it. The SBLC are determined also by the levels of risk that some countries have and the quality of the issuing bank.

One of the main benefits of SBLC is the fact that it guarantees the payment of the merchandise if the importer for some reason is unable to pay. It will cover the expense for continuous trips if required.

In case of default, the SBLC is involved in the production of documents provided at its opening (a copy of unpaid invoice, transport document, etc. ...).