The Importance of Export Documents in Trade
Trade overseas needs the support of export documents. Operations with foreign countries are made very complex, the sellers must explain what they are selling and the buyers must know what they are buying. For that reason, we use the following export documents:
Some of export documents are used for commercial purposes like bills, notes and weight packing. There are also documents to guarantee the quality of what is being exported. Insurance documents certify what is covered by insurance. Bills of lading are examples of transport documents.
There are different export documents that do not offer the same benefits to each user.
Letters of credit are an instrument that guarantees to the seller that he or she will be paid for the merchandise sent when it matches the criteria set in the contract by the importer.
Most are irrevocable and confirmed, which means that they cannot be modified but with the consent of the parts involved. Additionally, these documents relieve the exporter from any worry about nonpayment.
The export documents can be revocable or irrevocable, confirmed or notified.
Revocable documents give the holder the ability of modifying them without the consent of the other parts. Banks may also reserve the right to give or refuse payment.
Irrevocable: the bank can not reverse its commitment, whatever the changing circumstances of his client, unless the agreement of all parties concerned.
Notified documents give protection to the exporter but only to a certain degree. They will not cover for natural, political or transfer-related problems.
Confirmed, where the commitment of the banker of the importer is supported by a banker in the country of the exporter. The exporter must fully respect its obligations and it is guaranteed to be paid.
Exporters run a series of risks when venturing into new lands. First of all, they risk not being paid by the importer in the foreign country. Secondly, if they do not know the political and economic situation of the country they are exporting to, they risk losing their money. Another risk they take is related to the exchange rates. Export documents exist to relieve these risks.