Important considerations
- The complexity of operations
- The involvement of a company’s various departments
- An administrative complexity that leads to significant load breaks within the documentary chain
- The strictness of procedures (13 different operations)
- A lack of task automation
The documentary credit is still perceived as a complicated instrument. In addition, there is a succession of commissions that are calculated using different bases and rates, which does not make its cost clearly visible to the user.
For a vast majority of exporters, documentary credits are synonymous with bank reserves*, which instantly entail difficulties in managing their export risks. This can also lead to an increase in financial costs and a negative impact on the company’s cash flow.
Many companies are concerned about their documentary processes, which feature critical areas that are characterised by a lack of automation. This lack of automation often results in significant and relatively costly load failures, in terms of operational costs.
These critical areas are the source of errors and a lack of fluidity, which highlights the notion of “administrative complexity” that exporters face when operating with documentary credits.
(*) anomalies and errors found in the use of documentary credits