The use of documentary forms of settlements and their combination makes it possible to make payment terms of both regional and foreign trade agreements more flexible, reliable and as convenient as possible for trading partners.
A documentary credit is a written undertaking by the bank on behalf of the buyer (or on its own) to pay the seller the cost of the documents, subject to the conditions of the documentary credit. The advantage of a documentary letter of credit is a guarantee of the fulfillment of contractual obligations, both for the buyer and for the seller, since payment under the letter of credit is made only after the actual shipment of goods or the provision of services and in the presence of documents that fully meet the requirements of the letter of credit.
The terms of the documentary credit stipulate the conditions of transportation, cargo insurance, and thus, the risks of non-delivery of goods, delivery of inadequate quality, as well as insurance risks are eliminated.
It is also possible to confirm the documentary credit by a first-class foreign bank. In this case, this bank assumes the same obligation as Amonatbank, which further reduces the seller's risks.