Refinance credits

Updated: Aug 20, 2021

Credit facilities obtainable by an overseas buyer, where the exporter cannot provide credit and the buyer does not wish to pay cash. A credit is opened at the branch of an overseas bank in London in favour of the exporter. The exporter is paid on a sight draft drawn on the buyer’s credit; the advising bank in London (this being a recognized London bank) accepts a bill of exchange on the buyer; the bill is discounted and the proceeds put to the account of the foreign bank that issued the credit, thus offsetting the amount paid to the exporter. The buyer pays nothing until the bill drawn on the London bank matures.

Reference: The Penguin Business Dictionary, 3rd edt.

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