Hedging of default risks

by documentary transactions and guarantees

Whether import or export, a documentary business transacted through the bank creates trust between trading partners. Exporters protect themselves against default risks through documentary business, importers secure their liquidity until the goods or services are handed over.

Whether a letter of credit, documentary collection or guarantee, together with our specialists you will find the right solution to cover default risks for your foreign trade. We will be happy to advise yo!

In the following you will find an overview of the hedging options available to you.

Advance payment/down payment

The buyer pays the purchase price in full (advance payment) or in part (down payment) before production or delivery and/or service.

In the case of advance payment, the seller receives the full purchase price before production or delivery and/or service. This protects the seller's liquidity and, if applicable, the credit line. Advance payment can be used for example for purchases and production.

In the case of advance payment, the seller receives a part of the purchase price before production or delivery and/or service. The remaining part of the purchase price is paid later. In practice, combinations of advance payment and letter of credit are common.

Payment Guarantee

The buyer instructs his bank to open an irrevocable letter of credit as payment security in favour of the seller. The opening bank abroad as well as the confirming cooperative bank, if applicable, will secure payment for the seller.

Export Letter of Credit (L/C)

The buyer instructs his bank to open an irrevocable letter of credit as payment security in favour of the seller. The opening bank abroad as well as the confirming cooperative bank, if applicable, will secure payment for the seller.

Payment for the delivery and/or service to the Seller will be made by the Buyer's bank abroad upon submission and conformity of the documents with the export letter of credit (documents conforming to the letter of credit).

In the case of additional confirmation of the export letter of credit via the cooperative bank, payment to the seller is made after submission and verification of documents conforming to the letter of credit by the cooperative bank in Germany. This reduces the economic risk of the foreign bank and political country risks for the seller.

Exportinkasso (Documents against Payment or Acceptance)

Bei einem Exportinkasso legen wir als Bank des Verkäufers die Dokumente, die die Ware begleiten, der Bank des Käufers im Ausland mit einem Inkassoauftrag vor.

Der Verkäufer erhält damit die Möglichkeit, sein Auslandsgeschäft auf Treuhandbasis abzuwickeln und die Sicherheit, dass seine Exportdokumente dem Käufer erst dann ausgehändigt werden, wenn der Kaufpreis bezahlt oder eine Tratte (Wechsel) durch den Käufer akzeptiert wurde.

Bid Bond

The bidder/seller commissions the opening of the bid bond through us in favour of the tendering body (buyer).

The bidder/seller underlines the seriousness of his offer with the bidding guarantee. If a bidder wins the contract and withdraws his bid - for whatever reason - the tendering body will receive compensation for the damage caused to it by the use of the bid bond.

Advance payment guarantee

The seller orders the opening of the advance payment guarantee through us

The seller commissions the opening of the advance payment guarantee through us in favour of the buyer.

With the advance payment guarantee, the buyer ensures the reimbursement of his down payment if the seller does not provide the agreed delivery and/or service.

Perfomance Bond

The seller commissions the opening of the performance bond through us in favour of the buyer.

With the performance bond, the buyer insures himself against the risk that the seller does not perform his contractual obligations in accordance with the contract.

Warranty Bond

The seller commissions the opening of the warranty bond through us in favour of the buyer.

With the warranty bond, the buyer assures the enforcement of his claims in case of defects (e.g. quality, condition) of the received goods and/or services.

The warranty bond gives the buyer the opportunity to enforce his possible claim for a reduction of the purchase price and/or compensation for the damage he has suffered by making use of the bond if the seller does not fulfil his contractual warranty obligations in the event of defects in the delivery and/or service.

Import Letter of Credit

The buyer applies for the opening of a letter of credit with us. To enable both parties to better agree on which goods are to be delivered when and how, we support the buyer with appropriate templates.

With the import letter of credit, the buyer avoids any advance payments and ensures that he only has to pay if documents conforming to the letter of credit are presented.

Documents against Payment or Acceptance

In the case of Documents against Payment or Acceptance, we receive documents from the foreign bank proving that the seller has dispatched the goods.

The buyer receives the documents upon payment or when he accepts the draft (bill of exchange).

The buyer avoids, if necessary, an advance payment and keeps his liquidity longer.

For other special forms of documentary business (e.g. Standby Letter of Credit) we are at your disposal.