N.O.M Petrol - Useful information

Вторник, 2016-12-06, 10:47 PM



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Currently steady demand is observed for documentary instruments – a unique type of operation uniting elements of credit, guarantees, and payment and settlement servicing. The main reason for this is a considerable increase of the international trade volume, as well as a reduction of traditional bank crediting programmes. Documentary instruments – Letters of Credit and various types of Letters of Guarantee are actively used by major companies and international enterprises. Documentary instruments are also popular among official distributors interested in grace period for payment for the goods purchased, as well as by intermediaries having temporary need in current assets.
A comparatively low price of documentary instruments is achieved due to the requirements they are based on being governed by the International Chamber of Commerce (ICC). At present, the Uniform Customs and Practice for Documentary Credits (UCP 600) Uniform Rules for Demand Guarantees (2010 edition, URDG 758), and INCOTERMS 2000 international rules etc are in force.
The volume of international operations which use documentary forms of accounts settlement keeps growing. This can be explained by the following:
- By using documentary forms of accounts settlement one can ensure fulfillment of a whole set of contract conditions at a time; balance and reduce the risks of the parties to a transaction; unite all accounts settlement under a contract; arrange transportation and insurance of cargo with one payment instrument; control timely and complete supply of goods as well as execution and provision of all required documents;
- A company using documentary forms of payment does not have to freeze its own current assets in their bank; such current assets remain within the business and bring additional profit;
- The cost of documentary instruments is substantially lower than traditional bank crediting;
- Documentary operations develop and strengthen trust relations with foreign partners.
Thus, companies using documentary instruments get a convenient and advantageous mechanism of risk insurance in international trade. Using this service of pre-export or post-export financing, a company has the possibility to preserve the volume of its current assets, not withdrawing from them to purchase equipment or goods.
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