Advantages and disadvantages

Internationat guarantees


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Internationat guarantees

ADVANTAGES AND DISADVANTAGES
Issuing Customer Beneficiary Customer
ADVANTAGES It guarantees the delivery of goods before payment is made. It guarantees collection in the event that the customer fails to pay.
It provides solvency.
Tool that allows the importer to negotiate the price, because the exporter is guaranteed to collect payment. Access to new markets, which the exporter might not necessarily enter unless they were guaranteed to collect payment.
DISADVANTAGES Financial institutions do not check the goods but are obliged to make the payment provided the correct documentation is provided. When preparing the export documentation, the beneficiary must ensure it fulfils the terms of the guarantee on the assumption that in the future it may have to be executed.

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