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Documentary Credit:

A credit instrument such as a LETTER OF CREDIT or BACK-TO-BACK LETTER OF CREDIT with the condition of payment being the presentation and attachment of certain documents such as bills of lading, insurances, certificate of origin, etc. 

Documentary Credits are issued by a bank on behalf of it's creditworthy customer and for the purpose of guaranteeing payment to a third party, the BENEFICIARY.

Often associated with international trade, Documentary Credits are also used domestically and locally for all sorts of purchases and payment of services.

The Beneficiary to the transaction must present the documents listed on the Documentary Credit in order to be paid.

Documentary Credits may be assigned to a FORFAITER who will pay the Beneficiary a value less than the full amount of the Documentary Credit.  It then becomes the responsibility of the Forfaiter to present the proper documents in order to collect the full value due.

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