GlossaryEN1 min readUpdated: Jun 19, 2026
International trade financing
Exporters, importers, and banks use international trade financing to settle cross-border transactions while managing liquidity, credit, and payment-default risks.
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Exporters, importers, and banks use international trade financing to settle cross-border transactions while managing liquidity, credit, and payment-default risks. Core instruments include the documentary letter of credit (L/C) – under which the buyer's bank guarantees payment upon presentation of compliant shipping documents –, documentary collections, factoring, trade credit insurance, and supply-chain financing. For freight forwarders and customs brokers, these mechanisms have direct operational relevance: when goods move under an L/C, documents such as the bill of lading, commercial invoice, and certificate of origin must strictly conform to the credit's terms, as any discrepancy can suspend payment. Unlike a documentary collection – where the bank merely transmits documents against payment or acceptance – an L/C creates an independent payment obligation on the part of the issuing bank.
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