This is a guarantee, executed as follows:
- Credit is issued
- The beneficiary is notified
- The goods or services to be exported are prepared and dispatched
- The commercial documents are sent from the exporter to the importer
- Payment is transferred into the beneficiary’s account
- If payment is not made, the documentary credit will be used as a last resort and the required documents will be presented (box 46A):
- Unpaid invoices are photocopied
- Transport documents are photocopied
- Exporter/beneficiary sends a letter requesting the execution of the documentary credit and indicating the reference number.
- The documentation is checked by the exporter’s bank and sent to the issuing bank
- The documentation is checked by the issuing bank and payment is made to the beneficiary as required.
Stand By documentary credits are governed by ISP98 Regulations issued by the International Chamber of Commerce.