Definition

Noun: A financial arrangement where a bank in an importer's home country establishes a line of credit. This credit facility is specifically intended to guarantee payment to a foreign exporter for goods shipped. The exporter is authorized to draw funds (e.g., via a bill of exchange) directly against this credit.

Usage

This term is used in the context of international trade and finance. It describes the mechanism that facilitates and secures payment in cross-border transactions, reducing risk for the exporter.

Examples

• The supplier required an import credit to be established before shipping the machinery.
• The company arranged an import credit with its bank to finance the purchase of raw materials from overseas.
• The import credit assured the exporter of payment upon presentation of the shipping documents.

Advanced Usage

• An import credit is a key instrument in documentary credit transactions, often synonymous with a commercial letter of credit issued from the importer's perspective.
• The terms of the import credit are detailed in a letter of credit (L/C), which is sent to the exporter's bank (the advising bank).

Variants and Related Words

• Letter of Credit (L/C) (n): The formal financial document issued by a bank that implements the import credit, guaranteeing payment to the seller.
• Documentary Credit (n): A broader term for any credit arrangement where payment is contingent upon the presentation of specified documents.
• Export Letter of Credit (n): The same instrument from the exporter's point of view.

Synonyms

• Commercial Letter of Credit (when referring to the instrument itself)
• Documentary Credit

Related Terms

• Issuing Bank: The importer's bank that opens the import credit.
• Advising Bank: The exporter's bank that notifies the exporter of the credit.
• Bill of Lading: A key document required to draw against an import credit.

Noun

1. credit opened by an importer at a bank in his own country upon which an exporter may draw