If you sell goods to buyers outside of Canada, CIBC offers a full range of trade solutions to help you manage a smooth trading process and help you mitigate the risks and concerns associated with export business transactions.
CIBC's Export services could be for your company if any of the following apply:
- Your company is bidding on an overseas contract.
- You are seeking professional, knowledgeable advice about dealing with unfamiliar foreign buyers.
- You require payment assurance for your overseas shipments.
Export Letters of Credit
An Export Letter of Credit provides you with the undertaking from your buyer's bank that you will be paid, provided you ship the goods and present the documents specified in the Letter of Credit within a stipulated time. As an exporter, this reduces your payment risk and improves your cash flow by enabling you, in most cases, to request immediate payment under Letter of Credit drawings.
If you are not comfortable with the undertaking from your buyers bank, you can request an undertaking or a Letter of Credit Confirmation from CIBC, provided the associated bank risk is acceptable to CIBC.
When you have or are about to enter into an international contract with a foreign party, you may be required to provide assurance of your ability to meet the specific financial or performance obligations specified in the agreement. CIBC Cross-Border Guarantees may help you establish your performance capability and financial integrity without tying up cash.
Bid or Tender Guarantee
Foreign buyers may require a Bid Guarantee for 2% to 10% of the contract amount to accompany an international tender. Bid or Tender Guarantees provide buyers with the assurance that they will be financially compensated in the event that a bidder does not take up the contract once it has been awarded.
Once awarded the contract, you may be required to assure your foreign buyers of your ability to perform under the terms of the contract. Thus, you may be required to submit a Performance Guarantee for 5% to 25% of the contract amount to provide assurance to your buyers that they will be financially compensated in the event that you fail to adequately complete the contract.
Advance Payment Guarantee
If you arrange to receive from your clients any advance payments or progress payments on a contract, a CIBC Advance Payment Guarantee assures them that they will be repaid the advanced funds in the event that you fail to complete the contract.
Retention Guarantee/Advance Payment Holdback Under Contract Guarantee
Sometimes, the buyer can hold back payment of 5% to 25% of the contract amount for extended periods after the completion of the project, to ensure performance of post-contractual obligations on the part of the supplier. Should the supplier require cash prior to the end of the holdback period, CIBC can issue a guarantee to ensure the refund of the released funds to the buyer in the event that the supplier does not meet its specified post-contractual obligations.
CIBC provides support to Canadian companies that have an export contract with a foreign buyer. On behalf of Canadian exporters, CIBC assumes payment risks associated with international trade transactions and can provide discounting and/or re-financing under Letter of Credit obligations.
Export Financing provides exporters with funds required to perform under export contracts, as well as faster access to the proceeds of their transactions without affecting credit lines, thus accelerating cash flow between shipment and payment dates.
When the business relationship between you and your buyer is well established and you feel you no longer need payment assurance in the form of a Letter of Credit, you may agree to use Documentary Collections to facilitate your business transactions. An Export Collection calls for you to forward all shipping documents, including a bill of exchange, to your buyer's bank, which in turn advises your buyer of them. This ensures that your buyer cannot take possession of the goods you shipped unless they remit payment or a promise to pay on a specified date. Export Collections do not involve a payment undertaking from your buyer's bank, but are more cost-effective compared to Export Letters of Credit.
In addition to Export Letters of Credit, Collections, and Export-related Financing, CIBC Global Transaction Banking offers a range of other products and services to help you create, protect and realize value in your business. Our products are designed to facilitate domestic and international trade transactions, help you mitigate foreign buyer risk, accelerate cash flow, and provide trade-related financing. Our trade experts can provide assistance in negotiating the financial aspects of your trade contract, share their knowledge and experience of local and foreign markets, and answer any questions you may have about our products.
Your success means the world to us®
We are here to help you structure your transactions and offer creative financial and business solutions to suit the immediate and long-term trade-related needs of your company.