Why do business with us?
We provide personalized guidance and advice for importing, exporting and international growth. Our range of tools and secure payment methods make international trade easier and safer. They let you send and receive payments quickly and reduce the risk of non-payment.
Letters of guarantee or standby letters of credit
A letter of guarantee is a commitment by a financial institution to pay the beneficiary for goods or services if their business partner defaults. In Canada (outside Quebec) and the United States, a standby letter of credit serves this same purpose. Our specialists draft these letters and advise you on the guarantees you can offer.
Types of guarantees
Performance guarantee
A performance guarantee, or performance bond, protects buyers by ensuring they receive compensation if the seller fails to deliver the agreed-upon goods or services.
For example, if the equipment you ordered does not work as expected, you can make a claim under the performance guarantee for compensation.
Financial guarantee
A financial guarantee is a commitment to cover a debt or financial obligation.
For example, it can cover a company’s lease payment. If the company defaults on the lease, the landlord can collect payment from the company’s financial institution.
Bid guarantee
A bid guarantee, or bid bond, assures the project owner that you will fulfill the contract if your bid is selected. It makes your bid more credible, especially in construction and procurement projects. If you withdraw your bid or refuse to sign the contract, the bid guarantee ensures the project owner receives financial compensation.
Advance payment guarantee
An advance payment guarantee protects buyers who need to make upfront payments. It ensures that they get their money back if the seller does not fulfill the contract.
For example, if you pay an exporter in advance and they fail to deliver the goods, this guarantee ensures you are reimbursed.
Import and export documentary letters of credit
A documentary letter of credit is a payment guarantee issued by a financial institution for international trade. It assures the seller that they will receive payment as long as they provide the required documents. This tool gives peace of mind to all parties involved, ensuring both buyer and seller fulfill their commitments in the transaction.
How does a documentary letter of credit work?
If you’re importing
When you order goods or services, at your request, we commit to pay your supplier by a specific date.
If you’re exporting
When you sell goods or services, your buyer’s financial institution guarantees that you’ll be paid by a specific date.
Payment is only made once the seller presents specific documents showing they’ve fulfilled the terms of the agreement.
Benefits
- Makes international transactions more secure
- Guarantees suppliers they’ll get paid
- Speeds up document handling
- Ensures documents are handled by specialists
LC Express: Get letters of credit online
LC Express is our online platform where you can get import or export letters of credit, standby letters of credit or letters of guarantee. It makes it easier to manage your import and export transactions. Contact us for more information.
Documentary collections
Exporters use documentary collections to ensure they get paid. The exporter’s financial institution collects payment from the buyer in exchange for specific documents, which the buyer needs to access the goods.
How it works
The documentary collection process has multiple steps:
- The exporter ships the goods and then provides the requested documents to their financial institution, which forwards them to the buyer’s financial institution along with payment instructions.
- The buyer pays their financial institution, which then releases the documents to the buyer so they can claim the goods.
- The buyer’s institution pays the exporter’s institution, which then pays the exporter.