Trade finance · since 2013
Buy goods without prepayment.
Pay your supplier
in 60–120 days.
Documentary letters of credit for importers: receive your goods today, pay after you sell them. No collateral, no account opening at the issuing bank, through European banks.
BA Finance · Trade Finance
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Benefits of the instrument
Why a letter of credit works for importers
When a supplier insists on prepayment, a letter of credit resolves the conflict: the seller gets a bank guarantee, the buyer gets the goods without tying up working capital.
Import without prepayment
Don’t freeze your own or borrowed funds until the goods arrive. Your capital stays in circulation.
International standard
8 out of 10 foreign suppliers accept a letter of credit instead of prepayment. A universal instrument governed by UCP 600.
60–120 days deferral
Chinese factories offer up to 90 days, European ones from 60. The term runs from the moment of shipment from the warehouse.
Transparent pricing
1.3–1.8% per shipment. The final rate depends on volume, currency and the issuing bank.
Application process
Four steps from application to shipment
A transparent procedure with clear responsibilities at every step. From submitting your application to receiving the goods — no hidden terms.
Step 01Application and bank selection
The buyer submits a letter of credit application and confirms with the factory that it can work under an LC. We select an issuing bank matching the deal parameters and the supplier’s country.
Step 02Bank compliance
Once the limit is approved and the draft is agreed with the supplier, the issuing bank sends the letter of credit to the beneficiary’s bank via SWIFT in MT760 format.
Step 03Advising to the supplier
The supplier’s bank receives the SWIFT message and passes the letter of credit to the beneficiary. This is the seller’s financial protection and the confirmation needed for risk-free shipment on deferred terms.
Step 04Shipment and payment
The factory ships the goods and the cargo clears customs. The buyer obtains title to the goods. At the end of the deferral period (60–120 days), the buyer pays the supplier directly.
When it is used
When a letter of credit solves the problem
Typical situations where a documentary letter of credit is more advantageous than a bank loan, factoring or prepayment.
Supplier demands 100% prepayment
Purchasing raw materials and equipment from new counterparties with whom no credit history has been built yet. The letter of credit replaces prepayment with a bank guarantee.
Long transport leg
Sea shipments from China, Canada and Latin America — 30–60 days in transit. Deferral means you don’t pay for goods that haven’t arrived yet.
Seasonal peaks and working capital shortage
When you need to increase purchases but credit is expensive or unavailable. The letter of credit is opened without collateral and does not block the company’s credit limit.
Expanding trade turnover
A growing importer runs up against the limit of its own funds. An LC gives the factory confidence — it is ready to ship a larger volume.
Deals with new counterparties
A letter of credit balances the parties’ risks: the seller is protected by the bank’s undertaking, and the buyer pays only against documents.
Russian bank restrictions
When Russian credit products are expensive or unavailable, foreign financial instruments remain a workable solution.
Client
Evrodon agro-industrial group, Rostov region — one of the three largest turkey meat producers in Russia.
Challenge
The Canadian raw materials supplier worked on 100% prepayment with a 45-day delivery time. At the peak of the season, the company faced a shortage of working capital — and purchases could not be interrupted.
Solution
A standby letter of credit, Stand-by Letter of Credit (SBLC) — a written undertaking by the issuing bank to make a payment on the buyer’s behalf. In essence, a bank guarantee.
Implementation
Within 4 days, BA Finance audited the client’s documents and set a $700,000 limit for one month. During that time, the terms were agreed with the supplier, the draft was prepared and an SBLC for $487,000 was issued. A guarantee was signed on the bank’s form — describing the reimbursement procedure in case of late payment.
The Canadian supplier granted a 60-day deferral from the moment of shipment from its warehouse. Evrodon continued operating at full capacity without a working capital shortage.
Result
The buyer received the raw materials on time and preserved working capital. The supplier received a payment guarantee. Working with an SBLC gave Evrodon the original shipping documents in hand and a flexible agreement text convenient for both parties.
About the company
BA Finance — bank guarantees and letters of credit for import and export
The company’s main products are letters of credit (LC, SBLC), bank guarantees and SWIFT instruments for participants in foreign trade.
We represent a number of international banks offering services with no direct analogues on the Russian market. The main advantage for the client is the ability to pay the supplier after selling the goods to the end buyer.
With expensive credit and tightening requirements for borrowers, international financial instruments remain a workable way not just to continue purchasing, but to scale it up.
Ready to get started?
Get a draft letter of credit for your deal
Fill in the application in English — we will prepare the LC draft and agree the terms with the issuing bank. Consultation is free.