The documentary credit system for easier import and export
The documentary credit system from ECPA is accurately designed by accounting and legal experts, which makes it the best choice for import and export companies.
The import and export field is one of the most profitable fields in the Arabic market, which relies on buying or selling items outside the country. Since the seller and buyer don’t know each other well, they use an international guaranteed payment method: the documentary credit.
Documentary credit isn’t about import and export only, as businessmen prefer bank documentary credit in transactions that need a trusted third party. This third party guarantees the contract’s execution and guarantees avoiding fraud or trickery.
What is a documentary credit?
Documentary credit is a pledge from the importer’s bank to the exporter’s bank, where the bank guarantees payment for the imported goods within a specific period. The seller must prove the goods’ shipping with documents identical to the credit’s conditions. It’s also called bank LC (letter of credit).
Four parties deal with the documentary credit; they are:
- The seller
- The exporting seller’s bank
- The buyer
- The importing buyer’s bank
Steps of opening a documentary credit
- After agreeing on the deal, the exporter makes the contract and an invoice with the bank’s specifications signed and stamped by the importing and exporting companies. Then, the importer heads with it to his bank to open a documentary credit.
- The importing bank contacts the exporting bank to inform it about the desire to open a documentary credit and the agreed conditions.
- The exporter hands all the documents to his bank, which sends them to the other bank to finish the shipment procedures at its arrival.
- After finishing the shipment’s customs procedures and clearing it, the importing bank informs the exporting bank that the process is complete and the money must be transferred to the exporter.
Types of documentary credits
The documentary credits differ according to their classification into:
The exporter’s bank conditions:
This credit includes fixed conditions that can’t be changed by the importer or his bank, such as the deal’s cost, goods type, and shipping duration.
With it, the importer or his bank can modify the credit clauses without informing the exporter or his bank.
A documentary credit can include more than one of the previous types.
What is the documentary credit system?
It’s an electronic accounting program that aims to ease all the documentary credit-related procedures and processes. It’s used by import and export companies, and it includes documentary credit opening steps and dealing with credits in banks until complete deferral of the restrictions and guarantee letters.
Benefits of the documentary credit system:
- Facilitation of the procedures and opening steps of the documentary credits in banks.
- Confining different expenditures helps in financial rationalization and in cutting expenses.
- It saves time, money, and effort as you only need an online device and a printer.
- Tracking credits’ execution, shipments’ receiving, modifications, and violations.
- Issuance of instant reports about the executed or upcoming documentary credits.
The documentary credit system from ECPA
The “Egyptian Certified Public Accountants” company serves all sections and companies. So, it provides the best digital documentary credit system designed accurately by pioneers in programming under the supervision of our legal and accounting experts. It has many features make it the best choice for import and export companies.
Features of the documentary credit system from ECPA:
- Adding an unlimited number of documentary credits with the ability to modify and manage them.
- Confining all the information related to the credits, such as the value, bank coverage, and type of shipment.
- The program allows dealing with all the received shipments at once or in stages.
- The possibility to distribute the credit’s costs on a specific item or the total shipment items.
- Registering every documentary credit’s bank coverage percentage.
- Full inspection of the credits and their expenditures.
- It has a database of the exporters, importers, and banks the company deals with.
- The program guarantees shipment delivery according to the credit’s conditions.
- The program can be linked with other accounting programs, thus directly registering operations in records and financial lists.
- Instant recording of shipments’ entrance and distribution in the stores.
- The ability to distribute the shipment tax on the items and then calculate their prices with the taxes.
- Confining the number of items within the shipment and stores to know their amounts before and after the shipment.
- It can raise the credit’s value, extend its duration, and determine rising expenses.
- Instant deferral of the documentary credits’ restrictions and guarantee letters.
- Dealing with different types of credits, bank facilities, and importers’ facilities.
- Dealing with different types of guarantee letters and registering an endless number of them.
- Linking purchase orders directly with the program facilitates the documentary credit opening steps.
- It supports many local and international languages and currencies.
- The best after-sale services and technical support over the hour.
FAQs about the documentary credit system
The digital transformation of business and accounting operations has many advantages that will save you time, money, and effort and increase your productivity and profits, especially if the ECPA company’s experts do this transformation.
Learn about our offers and get a new success experience with the best team in the Middle East.