HSBC Trade Academy | Export Letter of Credit

HSBC offers the global trade finance solutions that help you to make the most of your working capital and trade with more confidence internationally. Our Trade Academy learning programme has been designed to demystify trade and help you to navigate the world of trade finance. When you’re exporting goods and services around the globe you want certainty that when your products have been delivered you’ll receive the associated payment. Ideally, you would also know how long it will take to get paid so you can manage cash-flow. Using a “Letter of Credit” also known as a “Documentary Credit” your importer’s bank commits to make the payment so long as certain pre-agreed conditions are met. HSBC typically advises around four-hundred-thousand Export Letters of Credit each year and our global footprint means we’re able to advise them in many countries around the world. Once you’ve agreed on the initial contract your buyer applies to their local bank to issue the Letter of Credit. It’s best to ask for a preview of their application, so you can check it matches the contract you’ve made together. If approved, the buyer’s local bank issues the Letter of Credit to your bank. Once the goods are shipped, You then present the required export documents, such as invoices or proof of transport and provided the relevant conditions are met, the payment obligation is triggered. Amendments and discrepancies in documentation could delay, or even prevent payment. So, provision of accurate documents is key. Because the bank is making the payment, not the buyer you could gain much better confidence over the payment date. When HSBC handles both ends of the transaction the integrated nature of our global banking network could also improve your time to cash. Using HSBCnet, our Instant @dvice service or our Trade Transaction Tracker app you can follow the whole process so you’ll always know what’s happening. Speak to your relationship manager or trade specialist to find out more about Letters of Credit or other HSBC trade finance solutions.

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