Financial Instrument Guides | Banking Terms & Definitions

Unlike a business credit card, corporate credit cards are specially designed for established companies to further issuance to their employees. It enables the employees of a firm to spend on authorized business expenses such as hotel stays, or plane tickets, etc without the necessity to use their own card or cash. These cards, also known as commercial credit cards enable employees to act as a business traveler in their firm’s name with their name on it. With the help of this card, the employees can pay for a range of business activities authorized by the company. It makes it easier for employees and employers to manage expenses and several perks. Read more: https://www.emeriobanque.com/blogs/benefits-of-using-corporate-credit-cards

Also known as corporate credit cards, corporate payment cards are the cards which are issued to specific employees by their employer to manage business-related expenses. Whether the employee needs to fly or need a card to reserve plane tickets or purchase office supplies, providing them a corporate credit card is the best way to keep track of expenses and make it easy for the employees to buy what they need. Read more: What Is A Corporate Payment Card?

A documentary collection is a type of transaction where the exporter approaches his bank (known as remitting bank) for the collection of payment, which sends documents to the importer’s bank (collecting bank) along with the instructions for the payment from the buyer. In other words, it is a type of trade finance instruments where an exporter is paid for its shipped goods by an importer after the banks of both the parties exchange the required documents. After the presentation of the documents, the exporter’s bank collects funds from the importer’s bank usually after the goods have arrived at the importer’s location. Read more.. Advantages And Disadvantages Of Documentary Collection

SWIFT Codes (Society for Worldwide Interbank Financial Telecommunication) is also known as Swift numbers used to identify the particular branch of the banks and financial institutions. These codes play a very important role in executing several bank transactions especially when it comes to international money transfer between banks. Read more: - Emerio Banque Swift Code

Documentary collection is a type of trade finance where an exporter is paid for his shipped goods & products by an importer after the two parties’ banks exchange the evidential documents. In other words, it is a method of trade finance where an exporter’s bank forwards documents to the importer’s bank to collect the payments for shipped goods. It occurs usually after the shipment of goods at the importer’s location.

Export finance is a process of funding the exporters to facilitate their business in the global market. In simple words, it is a cash flow solution for exporters to cater to their production and other global transaction requirements including working capital. International businessmen require export finance when they want to assure the affordability of the production of goods along with an assurance of getting paid on-time while sending goods to another country.

Import finance is the process of funding the gap between receiving the goods and sending the payments. It is a special type of trade finance where any bank or financial institution finances the purchase of the goods that are being purchased & exported from one country to be imported into another country. In simple words, import finance is the capital that is being used to bring the goods into the country.

Trade finance is the financial help provided by banks or financial institutions in the field of international trade through various types of financial instruments like bank guarantee, letter of credit etc. These varieties of financial instruments and products helps importer & exporters to execute business transactions without facing any financial inconveniences. It bridges the gap between importers & exporters by adding a third party and covers activities like issuance of letter of credit, lending or forfaiting, etc.

So, what is the difference? The key difference is that letters of credit are widely used in international trade & transactions due to the risk factors involved in global trade, for example, distance, different laws, and unfamiliarity of the parties to the contract towards one another, etc. While bank guarantees, on the other hand, are often used in real estate and infrastructure contacts to mitigate the credit risks in the domestic market. Read more.. Difference Between Bank Guarantee And Letter Of Credit

A standby LC is a legal document issued by the bank or any other financial institution on the request of the importer guaranteeing on-time payment to the exporter in the event if the importer defaults on the agreement. A standby LC provides a safety net in international transactions and ensures on-time payment to the exporter for delivering complete service or a shipment of physical goods. It is issued by the banks where the two parties to the contract don’t know each other and the agreement involves risks of international trade such as distance or different laws and regulations etc. Read more.. Letter Of Credit In International Transactions

A letter of credit, also known as a bank credit letter, payment guarantee letter, or documentary credit, is a legal financial instrument issued by a bank or a financial institution to guarantee the buyer’s payment to the seller. In the event, if the buyer is unable to make the payment or perform the terms and conditions of the contract, the full or remaining amount will be covered by the buyer’s issuing bank to pay the exporters. An LC is a highly-secured and effective form of assuring on-time payment to the exporter while initiating an international transaction. This guide covers only the types of LC. To know more, read our LC guide!

A Letter of Credit or “Payment Credit Letter” is a legal document issued from a bank, guaranteeing that the seller will receive their payment on-time from the buyer for their delivered services with the said amount. In the event, if the buyer is not capable of making the payment or performing the terms & conditions of the agreement on-time, then, the issuing bank will be responsible to cover the full or remaining amount from the importer.

To put it simply, import finance is a type of short-term trade finance where the bank or any private financial institution provides necessary capital or funds to the importers trading in the international market so that they could bring goods from one country to their own without facing any cash issues. This type of trade finance solution is provided by a third-party to finance the goods and services being brought from one country to another. Import finance includes a variety of financial products and services an importer can choose from to bridge the gap between sending and receiving.

A documentary collection (DC) is a type of transaction where the exporter approaches his bank (known as remitting bank) for the collection of payment, which sends documents to the importer’s bank (collecting bank) along with the instructions for the payment from the buyer. In other words, it is a type of trade finance instruments where an exporter is paid for its shipped goods by an importer after the banks of both the parties exchange the required documents. After the presentation of the documents, the exporter’s bank collects funds from the importer’s bank usually after the goods have arrived at the importer’s location. Read more:- https://www.emeriobanque.com/blogs/documentary-collection-meaning-types-and-process

Whenever you apply for a loan, whether you are running a small or big organization, the bank or any other lending institution wants to be ensured about your capability to pay the loan. For this purpose, you are asked about your income sources and credit history so that the lender could be able to establish your credibility before granting the loan. However, if the amount of your loan is large or the lender does not find your credibility suitable for the said loan, you may be requested for the collateral or a guarantee. Now you must be thinking about how you get a loan against a bank guarantee or how it differs from collateral. Read more:- https://www.emeriobanque.com/blogs/difference-between-bank-guarantee-and-collateral

A bank guarantee is a legal agreement between the Bank, the beneficiary, and the applicant ie. the borrower where the bank provides a guarantee to the beneficiary on the behalf of the borrower that the contractual obligations will be met in case the borrower is unable to do so. In other words, in a bank guarantee, the borrower/debtor appoints a lending institution ie. a bank to cover its losses if he defaults or fails to pay the loan. The bank assures the beneficiary through this bank guarantee that if the borrower does not perform his legal obligation or fails to settle the debts, then it will be taken care of by the bank.

A Usance Letter Of Credit is a particular type of letter of credit where the buyer gets a predetermined credit period ie. These usance letters of credit are payable within a predetermined time only after the presentation of the confirming documents. These are also known as Time LC or Deferred Payment LC.

If you are running an international business, you may be aware of what a letter of credit is. It is a legal document that is issued by a bank or a private financial institution to the exporter on behalf of the importer guaranteeing that the amount of LC agreement will be paid on-time. And if the importer is unable to do so, it will be covered by the issuing bank. In short, here the bank acts as a financial guarantor for the importer and ensures the exporters the amount for their delivered goods and services. But when it comes to the types of letters of credit, you often get confused between confirmed and unconfirmed LC.
Read more:- https://www.emeriobanque.com/blogs/difference-between-confirmed-and-unconfirmed-letter-of-credit

If you are running a business, you may understand the importance of effective management of cash flow. The way that you manage your cash plays a vital role in determining how much longer your company is capable of dominating the market. But sometimes, many small businesses face cash insufficiencies which often results in delayed payments of overheads and this is where invoice financing helps you. Read more:- https://www.emeriobanque.com/blogs/how-invoice-financing-can-help-business-grow

If you are an international businessman who is dealing in import-export services, here are some of the most important letters of credit questions & answers you should be aware of. Documentary credit is an essential trade finance tool for parties involved in the import and export industry. To get you a better understanding of what they are and how they work, here are top FAQs regarding Letters of credit.

Read more:- https://www.emeriobanque.com/blogs/letter-of-credit-frequently-asked-questions-answers

What is Personal Finance?

The concept of Personal finance revolves around innovative and effective ways of planning & managing your personal financial activities, for example, budgeting, banking, insurance, risk allocation, mortgages, investments, personal banking, retirement and tax planning, etc. The process of personal finance can be summarized in a budget or financial plan and can be executed for an individual, or a group of people. It requires a certain knowledge of finance expertise such as tax laws and depends on a particular person’s income & expenses, and individual financial goals.

Read more:- https://www.emeriobanque.com/blogs/all-you-need-to-know-about-personal-finance

Personal finance is an essential term that consists of planning and managing money, savings as well as investments. It includes budgeting, banking, insurance, investments, mortgages, retirement planning, and tax planning. The concept of personal finance is all about determining your personal financial goals such as savings for short-term financial needs or planning for retirement etc. It depends on your income, expenses, and financial individual goals to fulfill those financial requirements.

Read more:- https://emeriobanque.weebly.com/blog/benefits-of-personal-finance

Here are some of the most relevant and brief answers to frequently asked questions related to Bank guarantee. For those who are dealing in international trade and want to know more about bank guarantee services in detail, this blog will be helpful.

Read more:- https://www.emeriobanque.com/blogs/bank-guarantee-faqs

A documentary collection is a legal procedure that allows an exporter to instruct his bank to forward shipment documents (also known as trade-related documents or evidential documents) to the importer’s bank to receive the payment for the shipped goods or services. In simple words, it is a type of transaction where the seller gets the payment for his delivered goods & services from the buyer upon the presentation of shipment documents.

The exporter’s bank collects payment from the importer’s bank after exchanging shipment documents. It involves bills of exchange/draft that require the importer to pay the amount either at sight or on a specific future date. The bank acts as an agent for the seller to present the documents to the buyer through its bank and gets the payments for the exchanged goods & services.

Read more:- https://www.emeriobanque.com/blogs/how-does-documentary-collection-work

What Is Transaction Banking?

Transaction banking, which is sometimes also referred to as transactional banking services is a set of banking solutions designed to cater to the operational and day-to-day transaction needs of businesses, corporate and institutional customers. The term “transaction banking” stands for the movement of money from one place to another, thereby play a crucial role in the uninterrupted functioning of an organization by enabling the smooth and safe flow of money from one country to another ie. cross border payments.

It includes commercial banking products and services to corporate clients for minimizing risks, managing cash flow, trade finance deals, and even security services to boost relationships between organizations on a global level. These services help corporates ensure safe cash and security transactions around the world's financial framework.

Read more:- https://emeriobanque.over-blog.com/2021/02/all-you-need-to-know-about-transactional-banking-services.html