Letter of Credit

How does it work

Any business exporting its goods wants confidence that they will receive payment. Consequently, if you are buying goods from a company overseas, they may ask you for an Import Letter of Credit.

An Import Letter of Credit is a commitment given by White Oak IE’s bank to pay your supplier using a credit facility that you have pre-agreed. Payment is only made if White Oak IE’s bank receives specified documents about the transaction from your supplier. The Import Letter of Credit sets out the documents to be provided and the conditions to be met.

This means the goods you acquire will be the goods you have ordered and they will be delivered at the agreed time and place. Your supplier will be equally confident that they will be paid by White Oak IE’s bank.

Key benefits

  • Safe and effective – Letters of Credit are normally legally binding and cannot be cancelled unless all parties agree.
  • Peace of mind – the exporter must ensure that all goods sent to you are as agreed; if not, they run the risk of non-payment.
  • Reduces financial risk – payment is only made if the exporter fulfils the terms of the Letter of Credit.
  • New market penetration – Letters of Credit play a key role in international trade, allowing you to trade safely in unfamiliar markets.
  • Negotiating power – Letters of Credit guarantee payment to the exporter, you may be able to secure a better price for the goods.

Import Documentary Collections

Import Documentary Collections cover the importer against performance risk. In other words, payment is only made when you, the client, have received the goods.

How it works

After the goods are shipped, your supplier presents shipping documents together with their instructions to White Oak IE’s bank. The supplier’s bank then forwards them to White Oak IE’s bank to arrange payment.

White Oak IE’s bank acts on behalf of the supplier’s bank to collect the payment from White Oak IE and you, the client, promise White Oak IE that you will pay at a later date.

A promise to pay usually involves you, the client, accepting a Bill of Exchange (a document which you sign stating you are accepting that you will pay a stated amount immediately, or at an agreed time in the future). Under the collection agreement, White Oak IE’s bank will not release the shipping documents to White Oak IE or to you (so you can collect the goods on their arrival), until you have the signed Bill of Exchange.

Key benefits

  • Enhanced cash flow – You don’t pay for the goods until the agreed date between you and White Oak IE, allowing you to keep cash in your account for longer.
  • Safe – Documentary collections are more secure than paying for your goods in advance as you only make payment upon proof of shipment.
  • Universally accepted – Documentary collections are subject to globally-recognised rules issued by the International Chamber of Commerce.

How we work

We work closely with you, the client, on every transaction in order to ensure that each trade is flexible and tailored to your specific business requirements so that you can continue to trade with our help, with confidence.

Having the facility to provide Letters of Credit allows an advantage to you over your competitors and allows you to negotiate payment terms and price with confidence.

White Oak IE has a team of experienced professionals across a varied spectrum of industries and a global reach of connections, which means that as well as supporting you with funding solutions we can potentially increase your network of connections globally. 

As we stand for real relationships here, support is always on the other end of the phone.