Advising Bank

Learn about advising bank services to help your business navigate financial trading markets
By Shannon Hurley If your business is involved in international trade, you will likely need to utilize the services of an advising bank. Most often, an advising bank deals with and authenticates letters of credit for foreign banks. The bank will let the exporter know the stipulations that surround the letter of credit.

An advising bank is either a branch office of the issuing or corresponding bank or a bank appointed by the beneficiary. Understanding the role and importance of an advising bank is critical for the success of your business operations. The role of an advising bank is varied and may include the following functions:

1. Acting as an advising bank by authenticating a letter of credit and informing the exporter that a letter of credit has been opened by the importer for the exporter.

2. Acting as a confirming bank by confirming a letter of credit.

3. Acting as an accepting bank by endorsing a bill of exchange.

4. Acting as a paying or negotiating bank by paying the exporter on presentation of documents.

Obtain advising bank information online

Before contacting or acting as an advising bank, educate yourself about the role and duties of an advising bank. You should also become educated about how advising banks are dealing with increases in e-commerce and whether or not it will affect their role in the international financial market.
Try:  Take a look at an article highlighting the role of the advising bank in e-commerce provided by GlobalTrade Corporation, a software developer and applications service provider for the trade finance and services community. Also view an article at Asia Trading Online explaining letters of credit and how advising banks are involved in the authorizing process.

Seek help with advising bank questions and acquire advising bank advice

Learn from the experience of others by reviewing advising bank court cases in which liability was an issue. Understanding precedents in advising bank cases will help your business navigate specific situations and guard against unwanted complications. You should also review articles and books pertaining to international business transactions to answer your advising bank questions.
Try:  Access a free download of a court case dealing with advising bank liability at Mondaq to learn from the experience of the stakeholders involved. Learn about advising banks from The Fundamentals of International Business Transactions, edited by Ronald Brand; preview the contents, read reviews and order online.

Contact an advising bank and request their services

Obtain the services of an advising bank to help your business in its international business and trade transactions. Even if you already retain the services of an advises bank it may be prudent to acquire the services of another or simply get answers to your financial questions.
Try:  View the trade and finance services provided by Citigroup. Contact American Express to learn how you can utilize their advising bank services.

• If you are unsure about what is required of your business in an international trade endeavor, obtain the services of an advising bank consultant to ensure you are maximizing efficiency, saving time and keeping costs low.