Currently, the activities of almost any enterprise actively promoting its products on the market is associated with foreign manufacturers and suppliers: from buying of production lines and equipment to purchasing of necessary components, parts and raw materials. At the same time, many companies have difficulties in receiving a loan for making payments under import contracts. In such cases, it will be beneficial for the business to use trade finance by opening an import letter of credit from Bank “Ipak Yuli”.
Trade finance – it is the provision of short-term financing for import contracts using funds raised from foreign banks and international financial institutions. In other words, trade finance is a deferment for importers to reimburse payments made by Bank “Ipak Yuli” under their import contracts. Trade finance is carried out by opening documentary letters of credit for up to 1 year period, including the validity period of the letter of credit.
The advantages of this method of financing of import contracts:
• Relatively low commission rate in contrast to interest rates on standard loans;
• Simplified requirements for documents, needed for receiving trade finance, as opposed to documentation for standard loans;
• Lighter terms for provision of collateral, in form of providing commodities in warehouses as a partial collateral;
• No need for withdrawal of working capital to purchase goods and possibility of repayment of financing after sales of imported goods;
• Payment of commissions on financing in sums (national currency) as opposed to interests on foreign currency loans, which are paid in foreign currency
• Reducing the risks of non-delivery of goods and preventing of forming of overdue receivable accounts, in contrast to utilization of prepayment under the contract;
• Qualified consultation and transaction support from Bank “Ipak Yuli”.
How letter of credit does function through trade finance?
1. Before concluding an import contract, contact Bank “Ipak Yuli”. Our employees will help you select the most convenient conditions for you and add them in the contract terms;
2. After signing of contract, submit an application to Bank "Ipak Yuli" for opening a letter of credit with the terms of trade financing;
3. After procedure for assessing the collateral and internal approval of the transaction, Bank "Ipak Yuli" opens a letter of credit in favor of Exporter and sends it through one of its correspondent banks;
4. The correspondent bank notifies the Exporter through the Exporter's bank about opened a letter of credit in his favor;
5. On the basis of received letter of credit, Exporter ships the goods and provides shipping documents to correspondent bank through his bank;
6. After receipt and checking of documents, correspondent bank makes payment under letter of credit and provides a deferred payment period to Importer - the customer of Bank “Ipak Yuli”;
7. The importer receives already paid goods and proceeds on their sale in domestic market;
8. Upon expiration of deferred payment period, the Importer shall repay financed amount under the letter of credit.
How to receive trade finance from Bank “Ipak Yuli”?
1. Contact us before concluding an import contract, for negotiating on all terms of import contract in the most favorable form for you. Don't forget to register the contract after signing it;
2. Apply for trade finance to corporate loans department at Bank’s branch, which serves you;
3. After assessing the collateral and approving the transaction, sign a financing agreement with bank;
4. Submit your application for opening a letter of credit. Our specialists will help you fill it out.
Phone: + 998-78-140-78-03