Our team of delivers quality advisory services for traders involved in cross country transactions through the following:

1. Documentary Credit – Documentary credits or, as they are often referred to as Letters of Credit (or L/C), are commonly used in international trade when the parties are not familiar with each other and prefer to commence their business relationship cautiously: the exporter may be reluctant to send goods to the importer without being sure that payment will be made, conversely the importer may not want to pay for the goods unless they are sure that goods will be shipped.

In that respect, using documentary credits as a payment mechanism substitutes the credit of the importer with that of their bank, ensuring that the exporter receives payment as soon as the goods have been shipped and, if required, granting short-term financing to the importer.

The International Chamber of Commerce (ICC) in Paris has formulated the Uniform Customs and Practice (UCP) for Documentary Credits. This set of rules is acknowledged and utilized worldwide and outlines the payment obligations that banks enter into when supporting their clients with documentary credits. The banks must observe the terms of the documentary credit only, regardless of any other ancillary contracts, and are responsible solely for handling the underlying documents of a transaction, bearing no responsibility for the goods or the project to which the documents are related. Hence, the results that we at AfriZone aim to achieve for our clients are twofold: lessening the cost of carrying out their trade and mitigating their financial risk.

• Import & Export Financing – International trade is oftentimes burdened with significant costs associated with freight, insurance, cross-border payments and foreign exchange, to name a few. Commonly, these costs increase exponentially when factoring in tariffs, import duties, Incoterms, not to mention shipment and customs delays, warehouse fees and miscellaneous complications. Many multinational enterprises do not have a full-fledged finance department but rather outsource this function to focus on being successful in their trade. At AfriZone, we are happy to assist you with your trade finance requirements, thereby reducing your company’s stress levels and giving you more time to take care of your business.

Import & Export finance solutions are designed to overcome many cross-border trade challenges, freeing up your working capital to grow and expand your business.

• Documentary Remittances – Documentary Remittances or Collections are regulated by the ICC Uniform Rules for Collections (URC), publication No. 522. Much like documentary credits, documentary remittances are trade finance instruments, whereby the exporter entrusts their bank with the collection of payment for goods supplied. The exporter’s bank (also known as remitting bank) sends the shipping documents, air waybill, bill of lading, commercial invoice, certificate of origin, insurance certificate, packing list, as well as any other documents required for customs clearance, to the importer’s bank (also known as collecting bank), together with the payment instructions.
• Factoring – Factoring, also known as Receivables Finance or Invoice Discounting, is a payment mechanism whereby the Exporter sells their receivables (outstanding invoices) at a discount to a bank or other finance provider (the Factor). As a result, the Factor becomes the owner of the underlying receivables and takes on the risk of collecting the payment from the Importer. Therefore, the Importer needs to settle the payment directly with the Factor, not the Exporter.

The buyer is normally made aware of the Factoring, which can be provided with or without recourse, depending on the underlying receivables, creditworthiness, credit insurance or lack thereof, and governing law.

The Exporter enters into the factoring agreement with the Factor, which normally is a bank or other specialized finance providers with experience in the receivables financing market. The Factor then sends the Importer a written Notice of Assignment to notify the debtor that the right to collect payment invoiced by the Exporter has been assigned to the Factor. Upon receiving such notice, the assignment of debt to the Factor becomes legally effective and binding.

We at AfriZone are intimately familiar with Factoring transactions and we are able to assist SMEs as well as large joint-stock companies with their cash flow needs, thus increasing their competitiveness in the marketplace.