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The main advantages and disadvantages of a documentary credit are summarised in the following table.
| IMPORTER | EXPORTER | |
|---|---|---|
| ADVANTAGES | It assures that the goods are sent prior to making payment. | It guarantees payment collection upon presentation of the correct documents. |
| It offers solvency. | It offers a finance option. | |
| It can be used by the importer to negotiate on price, since payment collection is guaranteed for the exporter. | Access to new markets, which businesses might not enter without a guarantee of payment collection. | |
| DISADVANTAGES | Banks and financial entities do not check goods, and payment must be made upon the presentation of correct documents. | As the most complete means of payment/collection, monitored exhaustively by banks, it also charges among the highest fees. |
| The Bank must approve operation risk in order to issue the documentary credit. | More complex means of payment collection: difficulty drawing up the required documentation. |
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