L/C Confirmation
Letter of Credit (L/C) confirmation provides a guarantee of payment to the exporter provided that all terms and conditions of an L/C (issued by another bank) are complied with. It takes a form of “open confirmation” or “silent confirmation,” depending on whether or not the confirmation is disclosed to all relative parties.
Structure of Typical L/C Confirmation Arrangements
Benefits of L/C Confirmation Arrangement
Risk hedging
Country risk and payment risk of the L/C issuing bank can be covered by confirmation subject to complying documents presented to Mizuho.
Notice
- The use of the above products or services is contingent upon the credit assessment in accordance with Mizuho Bank’s prescribed procedures. As part of this assessment, you may be required to submit certain documents.
- Fees may be charged for using these products or services.
- Please consult an attorney, accountant, or tax accountant regarding any legal matters, accounting issues, or taxation concerns.
L/C Forfaiting
Letter of Credit (L/C) forfaiting allows an exporter to receive up–front payment for selling L/C–based receivables at a discount on a non–recourse basis.
The exporter seeking to hedge the insolvency risk of the L/C issuing bank and the country risk of the importer and receive payment upfront may approach an advising bank to purchase the L/C–based receivables at discount, giving up the right to collect full payment in the receivables to the said bank.
Structure of a Typical L/C Forfaiting Arrangement
Benefits of L/C Forfaiting
Risk hedging
- Reduce non-payment risk while increasing the transaction volume with the importer under flexible payment terms
- Shift insolvency risk of the L/C issuing bank to the advising bank
Improving balance sheets
- Optimize balance sheets by taking the receivables off the balance sheet (please consult with your professional accountant)
Reducing management burden
- Reduce the burden of collecting the receivables from the importer
Increasing competitiveness
- Allow for prolonged or flexible payment terms for competitiveness, while reducing payment risk of importer.
Notice
- The use of the above products or services is contingent upon the credit assessment in accordance with Mizuho Bank’s prescribed procedures. As part of this assessment, you may be required to submit certain documents.
- Fees may be charged for using these products or services.
- Please consult an attorney, accountant, or tax accountant regarding any legal matters, accounting issues, or taxation concerns.
Invoice Discount Finance
Invoice discount finance is an arrangement in which the exporter assigns the receivables to obtain funds on a limited recourse basis or non–recourse basis. The purchasing bank typically funds the value of the receivables less discount to the exporter and receives full payment on the receivables from the importer.
This arrangement, which improves the exporter’s short–term liquidity position, could be used as an off–balance sheet treatment, subject to consultations with your local accounting, tax and legal advisors.
Structure of a Typical Invoice Discount Finance Arrangement
Benefits of Invoice Discount Finance
Business expansion
- Mitigate exposure against the importer or its country while increasing the transaction volume
Finance and accounting
- Secure additional funding sources
- Improve cash conversion cycle and working capital efficiency
- Improve the short–term liquidity position
Notice
- The use of the above products or services is contingent upon the credit assessment in accordance with Mizuho Bank’s prescribed procedures. As part of this assessment, you may be required to submit certain documents.
- Fees may be charged for using these products or services.
- Please consult an attorney, accountant, or tax accountant regarding any legal matters, accounting issues, or taxation concerns.
D/A Forfaiting
D/A forfaiting is an international exporter–financing arrangement for documents against acceptance (D/A) arrangements. It allows the exporter to receive up–front payment for selling trade–related bills at a discount and can be used for short–term liquidity as a limited–recourse or non–recourse financing.
Structure of a Typical D/A Forfaiting Arrangement
Benefits of D/A Forfaiting
Risk hedging
- Hedge the commercial and country risk of the importer
Improving balance sheets
- Eligible for off–Balance sheet treatment, subject to consultation with your professional accountant, tax and legal advisors
Legal assurance
- No steps for perfection against obligor and third parties will be required subject to the laws of importer’s country and of export contracts.
Notice
- The use of the above products or services is contingent upon the credit assessment in accordance with Mizuho Bank’s prescribed procedures. As part of this assessment, you may be required to submit certain documents.
- Fees may be charged for using these products or services.
- Please consult an attorney, accountant, or tax accountant regarding any legal matters, accounting issues, or taxation concerns.
Silent Payment Guarantee
Silent Payment Guarantee is a financial instrument for the seller/exporter to hedge non–payment risk and political risk without disclosing to the buyer/importer. It allows the seller to start or continue trading relationships while limiting exposure to a specific buyer or country.
Structure of a Typical Silent Payment Guarantee Arrangement
Benefits of Silent Payment Guarantee
Risk hedging
- Mitigate non–payment risk after shipment
- Control exposure to a certain buyer and country
Increasing competitiveness
- Enable the seller to compete with other suppliers
Notice
- The use of the above products or services is contingent upon the credit assessment in accordance with Mizuho Bank–s prescribed procedures. As part of this assessment, you may be required to submit certain documents.
- Fees may be charged for using these products or services.
- Please consult an attorney, accountant, or tax accountant regarding any legal matters, accounting issues, or taxation concerns.
Supply Chain Finance
Supply chain finance is an arrangement that optimizes cash flow for both importers and exporters by allowing payment terms to be extended while providing an early discount payment option as well.
We offer access to the online supply chain finance platform, where buyers/importers and suppliers/exporters can interact globally in real time.
Basic Process of Systemized Supply Chain Finance
Benefits of Mizuho’s SCF Platform
Buyer/Importer Benefits
- Improve cash conversion cycle by extending payment terms
- Enable payment to the supplier without bank loan
- Provide leverage to negotiate favorable price and conditions with suppliers
- Strengthens relationships with supplier by offering favorable financing options
Supplier/Exporter Benefits
- Generate cash flow through early financing and shortening accounts receivables recovery time
- Mitigate risk of delinquency and exchange rate fluctuations
- Refine cash management prediction through the encashment of account receivables on an on–demand basis
- Visualize and streamline the reconciliation of credit and invoice
Notice
- The use of the above products or services is contingent upon the credit assessment in accordance with Mizuho Bank–s prescribed procedures. As part of this assessment, you may be required to submit certain documents.
- Fees may be charged for using these products or services.
- Please consult an attorney, accountant, or tax accountant regarding any legal matters, accounting issues, or taxation concerns.
Trade Portal Service
Our Mizuho Global Trade Service allows clients to issue and amend standby letters of credit, monitor their total standby letters of credit balance, check the status of each standby letter of credit, or download transaction reports.
Note: This service is available only at selected offices. With L/C transactions, a credit line approval and contract must be in place prior to service.
Note: Below is a sample screen.
Notice
- The use of the above products or services is contingent upon the credit assessment in accordance with Mizuho Bank's prescribed procedures. As part of this assessment, you may be required to submit certain documents.
- Fees may be charged for using these products or services.
- Please consult an attorney, accountant, or tax accountant regarding any legal matters, accounting issues, or taxation concerns.