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
برنامج الاعتمادات المستندية

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.
برنامج الاعتمادات المستندية

Types of documentary credits

The documentary credits differ according to their classification into: 

Payment methods:

Instant LC system:

With it, the bank pays the exporter instantly as it receives the credit opening documents and checks the conditions matching.

Partial LC system:

With it, the payment is made in parts.

Bank pledge:

Confirmed LC system:

With it, a bank pledges to confirm the credit and payment to the exporter.

Unconfirmed LC system:

This credit doesn’t include the bank’s coverage and payment guarantee.

The exporter’s bank conditions:

Irrevocable LC:

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.

Revocable LC:

With it, the importer or his bank can modify the credit clauses without informing the exporter or his bank.

Credit’s nature:

Exporting credit

Importing credit 

A documentary credit can include more than one of the previous types.

documentary credit system

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. 

documentary credit system
documentary credit system

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

What reports can the documentary credit system issue?

• A report of specific documentary credit data
• Reports of currently open documentary credits
• Reports of finished documentary credits
• A report of the cost of a specific credit, more than one or all credits.
• A report of a shipment or more costs.
• Reports of taxes

How is the credit cost distributed in the program?

The user can distribute the credit’s cost on a specific item or all of the items. It also minds different situations such as the costs that are distributed according to the size, weight, taxes, amounts not value, or vice versa.

What is the data mentioned in the documentary credit system?

The program registers all the credit-related data, including:
• Credit’s data such as its (number, value, date, expiration date, ledger number, actual arrival date, and probable arrival date).
• Exporter’s data such as (name, bank).
• The purchase order’s number.
• Shipment data such as (shipping policy, shipping way, arrival date, shipping line, and shipping agent).
• Associated bank data such as (credit value, bank’s name, credit currency, bank coverage percentage, coverage value, conversion factor, payment method, credit type, and payment conditions).
• Shipment items’ data such as (code number, item’s name, amount, colour, unit, price in local and foreign currencies, and the value in local and international currencies).
• You can determine all the shipment’s expenses and taxes.

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.

For a free Demo application from the documentary credit system please click here 

 To know the prices of the documentary credit system please click here