Documentary credit is primarily a means of payment for international trade, and exporters are accustomed to using it when selling to potentially risky markets. However, a confirmed export documentary credit will also serve the exporter as a financing instrument. The exporter may include a payment term granted to the buyer in the documentary credit and agree with the bank that the receivable shall be discounted at the shipping stage.
The exporter is able to improve its competitive position and balance sheet through documentary credit financing. The exporter can include the costs of discounting in the price of its product.