A documentary collection is used to obtain payment when the risk of using open account is too high and where a documentary letter of credit is considered unnecessary.
How does it work?
Your shipping documents covering imports into Malawi are forwarded by your suppliers through the banking system, to one of our service centres in Malawi. The shipping documents are received with a set of instructions to release the documents against receipt of payment, against an undertaking to pay or against an acceptance of a bill of exchange.
How will my business benefit?
When you are shipping company/transport documents are sent through our bank, you are spared the problem of having to retain safely the documents in your company, and then later on arranging to remit the foreign currency for payment.
When the documents covered under documentary collections are processed through our bank, we are able to advise and arrange for any exchange control requirements, and also final remittance of funds to the overseas bank.
Through our overseas correspondents we are able to provide a worldwide documentary collection service covering both imports and exports and ensuring that funds are transferred as per the terms of instructions between buyer and seller.
The most important benefit is speed in transferring funds and security in handling documents.
Documentary Letter of Credit
A method of financing international trade, a letter of credit is better described as any arrangement whereby a bank, acting at the request of and on the instructions from a customer, is to make a payment to or to the order of a third party, or is to accept and pay bills of exchange drawn by the beneficiary against stipulated documents, provided that the terms and conditions of the Letter of Credit are strictly complied with.
In documentary Letters of Credit, all parties deal in documents, not goods.
Therefore an underlying status report on the supplier should be obtained before entering into a contract, to ensure that the supplier is a legitimately constituted and reputable concern and likely to deliver what is required.
How will my business benefit?
If you wish to import goods you ask us to open a confirmed irrevocable letter of credit and we will advise it to your supplier's bank.
Depending on your contract and agreement with the supplier, the letter of credit may be drawn 'at sight' or 'at usance', but normally not exceeding 180 days.
Payment is then made upon presentation of documents, which strictly comply with the terms and conditions of the credit.
This facilitates smooth operation of trade between seller and buyer and also safeguards settlement especially when Forex is scarce. Letters of credit can be opened in any currency of your choice e.g. Dollars, Euros, Rand or Japanese Yen.
All corporate customers who import goods or raw materials into the country.
Manufacturers who wish to source raw materials for manufacturing into final products and for re-export.
Companies importing capital equipment.
Importers and trading firms.
Formal limits for lines of credit to establish documentary credits are determined by your service centre Manager or Account Relationship Manager.
For non-borrowing customers some upfront-cash margin may be required.
Our Bank provides trade information of various kinds as follows:
1. Credit Information Report
Provide our importing and exporting customers with bankers' opinions and credit standing of their counterparties both locally and overseas.
2. Trade Enquires
Through our association with Malawi Investment Promotion Council, the Malawi Confederation of Chambers of Commerce and Industry, corresponding banks and other international organizations worldwide, we are able to locate overseas importers of your local commodities.
3. Letters of Introduction
These introduce our corporate clients or executives to our overseas agents and correspondents, where from they might seek assistance and advice during their business trips.