Trade Solutions
Your Business is Going Places
Buy and sell overseas with confidence
Trade Solutions
This product or service is currently available in Bahamas, Barbados, Cayman Islands, Trinidad & Tobago, and Turks & Caicos only. For all other countries, please contact us directly to discuss your banking needs.
The world could be your market if you have the right tools to mitigate risks, strengthen trade relationships and arrange secure payment terms. As access to markets improves, extending your reach to new territories or sourcing raw materials from cheaper sources become attractive options. However, the risk, cost, time, cash flow constraints and lack of information remain a concern. We offer the products and solutions to help you buy and sell overseas with confidence.
Remittances
Safely, quickly and conveniently send/receive payments when trading.
When involved in international trade, you need to ensure that you can safely, quickly and conveniently send or receive payments.
This helps to build trust between buyer and seller as well as speed up trade transactions so you can start generating income from goods sold or inventory purchased. We provide several remittance options to suit your needs.
Our wire transfer solutions allow you to send or receive money quickly and securely and may be made to almost anywhere in the world and in any currency. For more on wire transfers, click here.
Risk Mitigation Instruments
RBC has a range of bonds, letters of credit and guarantees that will allow you to:
- Reduce the risks of your international operations
- Improve your cashflow management
- Build a relationship with the beneficiary
- Give your beneficiary assurance from a reputable financial institution
- Continue to trade on open account terms
The Documentary Letter of Credit (DLC) is a written undertaking by our Bank to guarantee payment to a seller/exporter (beneficiary). It reduces credit risk associated with international trade transactions by substituting the applicant’s credit worthiness for the bank’s.
Benefits:
Applicant (buyer/importer) – The applicant can specify what requirements or conditions must be met by the beneficiary in order to receive payment. Payments will be made only upon presentation of documents confirming shipment and the seller/importer is required to fulfill all the terms indicated in the letter of credit in order to receive the payment.
Beneficiary (seller/exporter) – The beneficiary can use the Letter of Credit (LC) as an irrevocable guarantee of payment and can feel confident trading with the applicant. Essentially, the credit risk is transferred from the buyer to the buyer's bank.
*Payment under an LC is based on documents being properly presented within a specified time and not on the terms of sale or the physical condition of the goods.
Stand-by letter of credit (SLC) is a written undertaking by a bank providing an irrevocable guarantee of payment to a seller/exporter (beneficiary) but is not tied to any particular transaction. It is often referred to as a performance letter of credit because it is only used should the buyer fail to pay as agreed.
Types of Stand-by Letters of Credit
- Financial standby letters of credit - Undertakings issued by the bank on behalf of clients to provide certainty to 3rd parties that the applicant can meet financial obligations e.g. collateral for surety
- Non Financial standby letters of credit - Undertakings issued by the bank on behalf of clients to assure 3rd parties of the customers ability to perform under bids and contracts e.g. guarantees for land development/ bid or tender guarantees
Benefits:
Applicant (buyer/importer) – The applicant can specify what requirements or conditions must be met by the beneficiary in order to receive payment. Payments will be made only upon presentation of documents confirming shipment and the seller/importer is required to fulfill all the terms indicated in the letter of credit in order to receive the payment.
Beneficiary (seller/exporter) – The beneficiary can use the Letter of Credit as an irrevocable guarantee of payment and can feel confident trading with the applicant. Essentially, the credit risk is transferred from the buyer to the buyer's bank.
Additional Benefits:
- Exporters selling solely to one foreign buyer face a "concentration" risk, should the one buyer become insolvent for any reason. A stand-by letter of credit, issued in your favour by the buyer's bank, would offer you increased security.
- A standby letter of credit guarantees a predetermined amount of money; if your buyer defaults on their credit terms, you can be paid for the goods you've already shipped, up to the amount guaranteed by the standby letter of credit.
A customs bond guarantees the payment of import taxes and duties on goods shipped by suppliers. It also assures compliance with all regulations and laws governing the entry of merchandise from overseas. A customs bond is a financial guaranty between 3 parties:
- The Business Clients - the Principal (who is required to file the bond)
- (RBC Royal Bank) - The surety company issuing the Customs bond
- The institution/agency responsible for customs in the country
The Customs bond guarantees the customs agency that, if they cannot collect monies due from the Principal, they can seek remedy, up to the bond amount, from the bank.
Benefit:
This enables a company to import goods from overseas for commercial purposes and clear goods from the port before payment of duty is made as payment is assured with the bond.
RBC Royal Bank offers a variety of guarantee solutions
Bid, Performance and Advance Payment Guarantees, Bid Bonds or Tender Guarantees
Bid Bonds or Tender Guarantees - To ensure that suppliers submit serious offers, tenders often call for up-front cash deposits or irrevocable guarantees. With an RBC Royal Bank bid guarantee, you can establish your credibility without tying up your cash.
Performance Bonds or Guarantees - Successful bidders often require a performance guarantee for a percentage of the contract amount. RBC Royal Bank enables you to meet your contract requirements and assures your client of your ability to perform.
Advance Payment Guarantees - If you require an advance payment from your client, an RBC Royal Bank guarantee assures the client that their advance will be repaid by RBC Royal Bank if you fail to meet your contractual obligations.
As an importer, you may have concerns about conducting business and negotiating payment terms with unfamiliar foreign suppliers. You need to ensure the goods have been shipped and the supplier has met the terms of the contract. Through Import Documentary Collections, RBC Royal Bank acts as an intermediary in the purchase process, providing you with an opportunity to review key documents before paying your supplier.
As an exporter, it is important to consider the credit risk of your foreign buyer. But it's not always possible to receive cash in advance for your goods. Through Export Documentary Collections, RBC Royal Bank and the importer's bank act as intermediaries, and payment for international transactions are processed through both financial institutions.
Call your nearest branch to get further details on how RBC Royal Bank will work with your business to reduce your risk and provide you with peace of mind.
The benefits of Documentary Collection are:
Importers can ensure that the goods have been shipped before paying or committing for payment.
Exporters can ensure that the ownership of goods will only be given to the importer once payment is received or guaranteed.
For more information about how our International Trade Solutions can benefit your business, call your branch for more details.
Ready To Get Started?
To discuss your business financing needs, please contact us or visit your nearest RBC Royal Bank branch.
