D-1-2-3- LThe revocable documentary credit : definition, advantages, drawbacks

Payment processing is one of the main preoccupations of companies with international transactions. Doing business is important, but compensation is essential. Esandis offers you free training space dedicated to international transactions, and all the skills you need to become an export or import manager. Our objective is to provide you an understanding of the importance of the payment component of an international transaction.

The documentary credit is one of these payment techniques. The revocable documentary credit is one of its variations.

1-2-3-1- The documentary credit : reminder

A documentary credit is therefore a payment technique and it is universally used within the scope of international transactions. It is one of the most secure payment techniques. This technique involves the respective importer and exporter banks. They become the guarantors of the transactions, permitting the exchange of the documents against the payment of the goods.

1-2-3-2- The revocable documentary credit : general

The documentary credit is therefore a payment technique. The revocable documentary credit is one of its variations.

The revocable documentary credit is a payment technique with rules and Uniform Customs and practices, UCP 600, that were published by the ICC, International Chamber of commerce, in 1998.

We should mention that the two most-often used documentary credits are the irrevocable documentary credit and the irrevocable and confirmed documentary credit.

1-2-3-3- The revocable documentary credit : definition

The revocable documentary credit is issued to the beneficiary on the instruction of the principal, and it may be amended, revoked or canceled. It therefore presents the risk of cancellation while the goods are in transit.

1-2-3-4- The revocable documentary crédit : avantages

One of its advantages, if compared with the two irrevocable documentary credit, is low cost. There are fewer provided services.

1-2-3-5- Revocable documentary crédit: drawbacks

In contrast with the two others documentary credits, it is not irrevocable and not confirmed, therefore lessening the guarantees.