Relationships with the Importer

When DC terms are agreed in a sales contract, the importer will have to have a relationship with a bank to facilitate the transaction.

The importer will have special needs that only his bank will be able to provide such as:

• assurance that he does not have to pay the seller until he is certain that the seller has fulfilled his side of the contract
• the possibility of obtaining loans to finance the cost of the imports until he receives proceeds from the sale of those goods
• advice and assistance on trade transaction procedures
• advice and assistance with foreign exchange activity

An importer’s bank will have correspondent relations with other banks or it will have its own branches in the country of the exporter to whom it will send its DC opened on account of its customer, the importer.

An importer will therefore need a relationship with a bank in order to open a DC which in essence provides for payment to be made against documents that represent the goods and makes possible the transfer of rights to those goods.