To put it simply, an exporter expects an importer to provide advance payment for items shipped. Naturally, the importer wants to minimize risk, therefore they ask the exporter to provide proof that the items have been sent. The importer's bank helps by giving the exporter (or the exporter's bank) a letter of credit that guarantees payment upon presentation of specific documents, such as a bill of lading. On the basis of the export contract, the exporter's bank may grant the exporter a loan.
Depending on how the transaction will be handled and how proof of performance will be provided, the type of document utilized in the process can vary (i.e. bill of lading in order to show shipment). It's important to keep in mind that banks only work with documents, not the actual goods, services, or performances to which the documents may be related.
A few examples of trade facilities are as follows: