Overview

The current financial crisis has driven many exporters to, once again, look to bank undertakings as
the means of securing their exports.

Those that have traded on open account terms for many years are looking at their transactions more closely to see whether a form of added protection is required for certain markets.

This has given rise to a demand in the need for issuance of documentary credits and the confirmation thereof, a demand that not all banks can fulfil. On the importer side, where documentary credits have already been issued, banks are placing more stringent reviews on documents and there are reported instances of applicants seeking their banks ‘assistance’ in refusing documents where an underlying commodity price has fallen or poor quality goods have been known to have been shipped.

On the one hand we have demand and on the other a situation where documents are being refused often for petty or unwarranted reasons. The key to all of this is a properly structured transaction that serves the purposes of both importer and exporter.