Documentary collections to manage and mitigate trade risks across Africa Corporate and Investment Banking Also trading as Stanbic Bank 1
Documentary collections Standard Bank your trade partner in, for and across Africa Documentary collections to manage and mitigate trade risks across Africa As exporters expand into new markets, the importance of having a banking partner that you can trust is greater than ever. While you can take prudent steps to know your buyer, there are many factors beyond your control that can prevent or delay you from being paid. Using documentary collections (also known as foreign bill for collection) through Standard Bank s global network, you will have peace of mind that you will receive payment. 2 3
Documentary collections In documentary collections, the seller ships the goods and then presents documents through Standard Bank with an instruction to the buyer s bank to either deliver documents against (immediate) payment, or deliver documents against acceptance for payment at a future date. This provides certainty that under documents against payment, the buyer will have to give payment instructions before receiving documents. Also, with certainty that under documents against acceptance (of a bill of exchange) for payment in the future, the buyer will first have to accept the bill of exchange (albeit not constituting a liability to pay on the bank s end at maturity) before documents are handed to the buyer. Furthermore, you may be concerned that there is a post shipment risk after dispatching the goods under documents against acceptance (since it does not constitute a liability to pay at the bank s end on maturity), where the buyer is unable or refuses to pay on maturity. To further mitigate this risk you may, in addition to the instruction to deliver documents against acceptance, include an instruction for the buyer s bank to guarantee payment at maturity before the buyer signs the bill of exchange. This is commonly referred to as an avalisation instruction and helps mitigate non-payment risk. Documentary collections support your trade activities as: across 20 African countries, Standard Bank can work with the buyer s bank providing a safe and secure environment to manage the flow of documents you remain in documentary control even after shipment, pending payment or acceptance of the bill of exchange by the buyer the instruction on the terms of payment is driven by you within the selling process banks involved will honour the seller s documents disposal instructions You can optimise your working capital, where: there is faster conversion of receivables (before their due date) through discounting of avalised bills the buyer s risk can be transferred to their bankers by avalisation, without recourse to you. Also, should you wish to be paid immediately to support your working capital needs under an avalised bill of exchange, Standard Bank may advance a discounted payment without recourse to you prior to payment due date. This is known as discounting. 4 5
/ Bank Guarantees The documentary collection process Buyer 1. Goods shipment Seller 5. Payment 4. Documents 2. Documents 7. Payment Supporting your trading activities across different regulatory environments With a deep understanding of the regulatory environments across our footprint in Africa, Standard Bank offers documentary collections that meet the requirements of the applicable exchange control regulations. In our capacity as an Authorised Dealer, we articulate the regulatory requirements relating to documentary collections to help you minimise risk in trade and benefit from working capital solutions. Contact us for information on international trade services in, for and across Africa Buyer s bank 3. Documents 6. Payment Seller s bank For further information on any of our products and services, contact: Your nearest Standard Bank International Trade Services office. 1. The seller ships the goods as agreed with the buyer in the contract 2. The seller presents documents with disposal instructions to their bankers 3. The seller s bank presents documents to the buyer s bank with instructions specified by the seller Telephone: 0860iTrade/0860 487 233 Visit our website at www.standardbank.co.za (select Corporate and Institutions, click on Products and Services, and click on International Trade Services under Transactional Services). 4. The buyer s bank acts according to instructions of the seller 5. The buyer pays their bank 6. The buyer s bank settles with the seller s bank 7. The seller s bank pays the seller. For short-term financing, under avalised bills, a discounted payment is advanced to the seller before the due date. Disclaimer This document has been prepared solely for information purposes by The Standard Bank of South Africa Limited, acting through its Corporate and Investment Bank Division ( SBSA ). Any indicative terms provided to you are provided for your information and do not constitute an offer, a solicitation of an offer, invitation to acquire any security or to enter into any agreement, or any advice or recommendation to conclude any transaction (whether on the indicative terms or otherwise). Any information, indicative price quotations, disclosure materials or analyses provided to you have been prepared on assumptions and parameters that reflect good faith determinations by us or that have been expressly specified by you and do not constitute advice by us and it should not be relied upon as such. The information, assumptions and parameters used are not the only ones that might reasonably have been selected and therefore no guarantee is given as to the accuracy, completeness, or reasonableness of any such information, quotations, disclosure or analyses. No representation or warranty is made that any indicative performance or return indicated will be achieved in the future. This document is not an official confirmation of terms, and any transaction that may be concluded pursuant to this document shall be in terms of and confirmed by the signing of appropriate documentation, on terms to be agreed between the parties. The information in the document is also subject to change without notice. SBSA, or an associated company, may have effected or may effect transactions for its own account in any investment outlined in the document or any investment related to such an investment. Prospective investors should obtain independent advice in respect of any product detailed in this document, as SBSA provides no investment, tax or legal advice and makes no representation or warranty about the suitability of a product for a particular client or circumstance. Transactions described in this material may give rise to substantial risk and are not suitable for all investors. SBSA will only provide investment advice if specifically agreed to by SBSA in appropriate documentation, signed by SBSA. This information is to be used at your own risks, and SBSA makes no representation with regards to the correctness of the information herein. 6 Authorised financial services and registered credit provider (NCRCP15) The Standard Bank of South Africa Limited (Registered Bank) Reg. No. 1962/000738/06. Moving Forward is a trademark of The Standard Bank of South Africa Limited. SBSA 182806-5/16 7
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