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Financial regulation

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The payment of the foreign supplier includes some provisions provided for by circular to approved intermediaries n° 94-14 of September 14, 1994, the purpose of which is to set the terms and conditions for the financial settlement of imports and exports of goods.

The most common international payment methods such as bank transfer, documentary remittance and documentary credit. The use of one of these payment methods is based on the relationship of trust between the importer and the supplier.

This transaction is a bank account transfer from the buyer to the seller using the SWIFT interbank network. It is the least expensive system but also claims a certain trust between the importer and the supplier.
It is a method of payment by which an exporter mandates his bank to collect, through his correspondent, the payment or the acceptance of the buyer, at the time of presentation of the documents representing the goods.

In this procedure, the banks only intervene as agents of their respective customers. They undertake only to carry out the instructions of their clients.

The use of this method of payment has some advantages for the supplier, such as the flexibility of procedures and the guarantee of payment at a lower price than that of a documentary credit.

It is the most widely used method of settlement in international trade, as it is the only one that provides satisfactory safety for both parties. The documentary credit is a commitment by which the importer’s bank undertakes to pay or reimburse the beneficiary, once the required documents have been delivered to him. It differs from documentary remittance where the importer’s bank is only an agent in the settlement procedure.

Documentary credit operations take place according to the following chronology:

  • The importer requests the opening of a documentary credit;
  • The importer’s bank opens the credit to the exporter’s bank;
  • Notification by the exporter of the opening of the documentary credit;
  • Shipment of goods and editing of shipping documents (invoice, bill of lading, packing list, certificate of origin, health certificate, etc.);
  • Delivery of documents by the exporter to his bank within the deadlines provided for in the notice of opening;
  • Sending documents to the importer’s bank that covers the credit in return
  • Delivery of shipping documents to the importer against payment of the invoice;
  • Taking possession of the goods by the importer through shipping documents;

The most common international payment methods such as bank transfer, documentary remittance and documentary credit. The use of one of these payment methods is recommended depending on the relationship of trust between the importer and his supplier.

This operation consists of a transfer of the buyer’s bank account to that of the seller using the SWIFT interbank network. It is the least expensive system but also claims a certain trust between the importer and the supplier.
It is a method of payment by which an exporter mandates his bank to collect, through his correspondent, the payment or the acceptance of the buyer, at the time of presentation of the documents representing the goods.

In this procedure, the banks only intervene as agents of their respective customers. They undertake only to carry out the instructions of their clients..

The use of this method of payment has some advantages for the supplier, such as the flexibility of procedures and the guarantee of payment at a lower price than that of a documentary credit.

It is the most widely used method of settlement in international trade, as it is the only one that provides satisfactory safety for both parties. The documentary credit is a commitment by which the importer’s bank undertakes to pay or reimburse the beneficiary, once the required documents have been delivered to him. It differs from documentary remittance where the importer’s bank is only an agent in the settlement procedure.

Documentary credit operations are conducted according to the following chronology:

  • The importer requests the opening of a documentary credit;
  • The importer’s bank opens the credit to the exporter’s bank;
  • Notification of the exporter on the opening of the documentary credit;
  • Shipment of goods and editing of shipping documents (invoice, bill of lading, packing list, certificate of origin, health certificate, etc.);
  • Submission of the documents by the exporter to his bank within the deadlines provided for in the notice of opening;
  • Sending the documents to the importer’s bank which covers the credit in return;
  • Delivery of shipping documents to the importer against payment of the invoice;
  • Taking possession of the goods by the importer using the shipping documents;

In order to provide further details on the possible arrangements for opening documentary credit, the following three types should be highlighted:

The revocable documentary credit
It can be cancelled or amended at any time without notice or notification to the seller: this formula therefore does not present a guarantee for the supplier.Although the supplier has a bank commitment to pay, the latter being revocable at any time, the supplier is never guaranteed to be paid.
The irrevocable documentary credit
It can only be canceled with the agreement of the issuing bank and the beneficiary. This formula is therefore safer, because it constitutes a firm commitment by the issuing bank. However, the seller remains at the mercy, in countries at risk, of political problems which can prevent payment, but also of problems of interpretation of the documents by the foreign bank, if the credit is feasible at the latter’s cash boxes.
Irrevocable and confirmed documentary credit
The exporter’s bank undertakes in this case itself vis-à-vis the latter. This commitment is added to that of the importer’s bank. As the confirmation covers political risks, the supplier then benefits from a full guarantee, provided that it fulfills its obligations.