ProCredit Bank, as one of the leading banks in Bulgaria, offers high quality trade finance services for your business.
Leveraging our experience and trained experts, we provide payment security and reinforce trust in your business partnerships with the help of bank guarantees and documentary credits we issue and confirm.
We can promptly meet the needs of your business for secure and fast service when it comes to securing contractual relations by bank guarantees, import and export payments for goods and services. Some of the most important instruments for securing your business are:
- Bank guarantee
- Documentary credit
- Documentary collection
Frequently asked questions:
What is the difference between a bank guarantee and a documentary credit?
The bank guarantee is an instrument securing payments and ensuring the fulfilment of commitments made between the partners. The documentary credit is an instrument that can be used to both guarantee a payment and make a payment. The bank guarantee and the documentary credit are independent and separate commitments from the commercial contract.
What is the difference between a documentary credit and a documentary collection?
Both bank products constitute payment instruments. The difference is that the documentary collection involves lower banking costs, but has a correspondingly lower degree of assurance, since payment depends entirely on the good faith and solvency of the importer. This is why it is popular with counterparties who already have previous trade deals and have established trust with each other.
Unlike a documentary credit, a documentary collection does not constitute a commitment on the part of a bank to pay. Banks handle/deliver the documents in compliance with the instructions of the exporter.
What is the rating of ProCredit Bank (Bulgaria) EAD?
ProCredit Bank (Bulgaria) EAD provides you with a high level of assurance. The confirmed Fitch rating is BBB-.
When processing bank guarantees, documentary credits and documentary collections, do the banks have anything to do with goods?
The banks deal only with documents and not with goods.
In order to contact us and if you have any questions related to trade finance of your business, please call: 0 700 1 70 70 or *7000.
The bank guarantee is a written undertaking issued by a bank at the request of its client.
By issuing the bank guarantee, the bank takes an irrevocable undertaking to pay a specific amount of money in the event of default or termination of the contractual relationship between the client and the beneficiary upon presentation of a written demand for payment in accordance with the terms and conditions of the undertaking.
ProCredit Bank can issue all types of bank guarantees depending on your business needs.
In addition to these guarantees, where ProCredit Bank acts as a guarantor, we also offer services for advising of bank guarantees issued in your favour by other banks.
Advantages of the bank guarantee:
- It provides security of the guaranteed payments;
- It is a powerful instrument for securing various liabilities;
- It guarantees the ability of business clients to fulfil their contractual obligations;
- Every stage of the transaction can be secured by a bank guarantee.
Example:
The company represented by you participates in public procurement. The Contracting authority requires assurance that you will perform your obligations in good faith. By issuing a bank guarantee, the Bank takes an irrevocable undertaking to pay the Contracting authority in the event that you fail to fulfil your contractual obligations to the Contracting authority. In this way, the Contracting authority is sure that you will perform the agreed work without he has to worry that he will remain uncompensated in the event of non-performance.
Frequently asked questions:
What types of bank guarantee can be used?
- Payment guarantees;
- Performance guarantees;
- Tender guarantees;
- Advance payment guarantees;
- Others, depending on the specific needs of the client and their business.
Can ProCredit Bank (Bulgaria) EAD issue a bank guarantee within 24 hours?
Yes, we can issue a bank guarantee within 24 hours.
Can the bank guarantee be confirmed?
Unlike documentary credit, bank guarantees are not subject to confirmation. Alternatively, an undertaking issued in the form of a bank guarantee may be confirmed by issuing it against a counter-guarantee from another bank.
What can you do if you are unsure about the trustworthiness of the issuing bank in the case of bank guarantees issued in your favour?
You can require your counterparty to provide you with a guarantee from a bank that you consider sufficiently trustworthy based on its credit rating.
When is a payment under the bank guarantee to be made?
Should a complying demand for payment is presented in the event of non-performance of certain obligations, the Bank shall pay the Beneficiary the amount claimed in due time in accordance with the terms of the specific guarantee.
In order to contact us and if you have any questions related to trade finance of your business, please call: 0 700 1 70 70 or *7000.
The documentary credit is a financial instrument for payment that differs from a free transfer in that it mitigates the risks borne by the parties in a transaction.
The documentary credit is independent of the contract of sale or any other contract.
In trade, the buyer often pays in advance, in which case they take the risk of not receiving delivery on time or the quality of the goods not being as agreed. In other cases, the seller first dispatches the goods and then awaits payment, taking the risk of the payment being late or there being other issues with it.
The documentary credit is an irrevocable undertaking by the issuing bank to pay the seller if the seller complies with the terms of the documentary letter. In order for the issuing bank to make the payment, the beneficiary (seller) must present the stipulated documents as proof that the goods have been delivered within the time frame and in the manner specified in the documentary credit.
The banks deal only with documents and not with goods, services, customs, carriers, freight forwarders, etc.
If you frequently require bank guarantees and/or documentary credits, you may apply for a credit line for their issuance or for a framework agreement for financing.
Example
A company imports goods from abroad. If the company has no previous dealings with the Exporter and/or if the company has concerns regarding its trustworthiness, the issuance of a documentary credit may be negotiated in order to ensure that both parties will comply with the agreed terms. In this way, the Importer will have assurance that it will receive the ordered goods as per the agreed parameters, while at the same time the Exporter will have assurance that it will receive its payment.
Frequently asked questions:
When is payment to be made under a documentary credit?
Payment shall be made upon presentation of the documents stipulated in the credit in accordance with its terms.
What is a transferable credits?
It allows the beneficiary to transfer all or some of its rights to draw down the amount under the documentary credit to a second beneficiary.
What is a confirmed documentary credit?
Confirmation of a documentary credit constitutes an additional payment commitment to that of the issuing bank upon the presentation of valid documents.
When shall documents presented under a documentary credit be considered as discrepant?
Where the documents presented do not comply with the terms and conditions of the documentary credit, they are not consistent with each other or with the applicable international rules.
Under what circumstances can a documentary credit be cancelled or changed?
The consent of the issuing bank, the confirming bank (if any) and the Beneficiary is required for the cancellation or amendment of the documentary credit.
In order to contact us and if you have any questions related to trade finance of your business, please call: 0 700 1 70 70 or *7000.
The main characteristics of documentary collection are:
The bank of the exporter forwards the prepared shipping documents to the bank of the importer along with instructions as to the terms and conditions under which the bank of the importer is entitled to deliver the documents to its client.
The exporter receives payment from the importer in exchange for the documents.
Whenever you export goods/services, ProCredit Bank shall handle the documents provided by you according to your written instructions and shall send them to the bank of the buyer – your partner in the transaction.
Whenever you import goods/services, ProCredit Bank shall receive the documents containing written instructions from the bank of the seller and shall deliver them to you when you order payment of the amount due.
The documentary collection also allows the parties to agree on deferred payment.
The documentary collection is a cheaper payment instrument than the documentary credit, but also a bit more risky. It is usually limited to transactions between parties that have already established trust.
Example
You are a company involved in the import of goods. You have confidence in your counterparty as to the quality of the agreed goods, but you want to be sure that the goods are loaded and on their way to the agreed unloading location before you arrange their payment. In this case, you may require the Exporter to send the commercial documents, including the transport document as a documentary collection, in order to ensure that the goods are on their way and that you will have all the necessary documents to release the goods before you pay.
Whereas, if you are involved in the export of goods, then the documentary collection will provide you with the assurance that you will receive your money against delivery of the set of documents allowing the goods to be collected from the respective Importer.
Frequently asked questions:
Is a documentary collection recommendable as a payment method when working with a counterparty for the first time?
In cases where you do not know the counterparty and you are dealing with them for the first time, it is more relevant to use a documentary credit.
When is the importer going to receive the documents sent using documentary collection?
Depending on the instructions of the remitting bank – against payment and/or acceptance or other terms and conditions specified in the collection instruction of the remitting bank.
In order to contact us and if you have any questions related to trade finance of your business, please call: 0 700 1 70 70 or *7000.