Payment processing for raw material exports from Brazil

Reliable, traceable, without bureaucratic hurdles.

Payment processing in commodity trading – transparently regulated with VALIA Brazil, globally compatible, without risk for buyer or seller.

International commodity transactions require a high degree of trust – especially for initial transactions, larger volumes or complex supply structures. VALIA Brazil ensures that payments are processed in a fair, traceable and risk-minimized manner. Our payment modalities are based both on the requirements of our customers and on the practical conditions of the Brazilian financial system.

Our payment models combine international standards with Brazilian practice – for maximum security on both sides.

Payment requirements in trade with Brazil – what to consider

Different conditions apply to commodity exports from Brazil than to traditional banking transactions with Europe or Asia. The reason: Brazilian banks do not offer comprehensive processing via letters of credit (L/C), as local legislation and practice severely restrict this. Alternative payment models are therefore necessary – and common internationally.

VALIA supports you right from the start – with advice, tested procedures and coordinated payment agreements.

What are the usual payment methods?

Depending on the scope of the project, customer experience and delivery conditions, VALIA Brazil uses the following models:

1. Prepayment with secured documentation

  • Especially for first-time transactions or exclusive reservations
  • Payment in installments (e.g. 30/70 or 50/50)
  • Linked to documented milestones (e.g. SPA, loading documents)
  • Use of escrow accounts or payment protection via insurance possible

Safe for both sides: The supplier receives planning security – the buyer pays in clearly defined stages.

2. Document-based payment (CAD – Cash Against Documents)

  • Payment is made after presentation of the transport and origin documents
  • Particularly suitable for ongoing business relationships
  • Transparent control of document approval before payment in cooperation with accredited banks and forwarding agents

Compromise solution between prepayment and L/C – without the expense of a letter of credit.

3. Escrow account / escrow service (on request)

  • Third-party provider (e.g. law firm or specialized escrow provider) holds the payment in safekeeping until delivery
  • Suitable for larger projects or new partners
  • Conditions are regulated individually in the SPA

Maximum security when no direct leap of faith is possible.

4. Special models for existing customers

  • Framework agreements with payment terms possible
  • Credit check and history required
  • In cooperation with Brazilian export banks or credit insurers

Would you like to pay by letter of credit? … and why this hardly works in practice for exports from Brazil!

Many international buyers rely on letters of credit (L/C) when purchasing raw materials or agricultural products abroad – for good reason: the letter of credit is a proven payment instrument for securing transactions worldwide. However, the reality is different for exports from Brazil:

  • Fact: Letters of credit are formally possible – but highly problematic in practice.

In Brazil, banks are generally allowed to work with letters of credit; there is no legal prohibition. Some large institutions such as Banco do Brasil, Bradesco or Itaú have the necessary infrastructure.

In Brazil, banks are generally allowed to work with letters of credit; there is no legal prohibition. Some large institutions such as Banco do Brasil, Bradesco or Itaú have the necessary infrastructure.

But:

  • Processing is extremely bureaucratic, as Brazilian banks are subject to strict foreign exchange regulations and internal review processes.
  • Processing times are long, especially for foreign transactions with volatile markets.
  • Bank charges are high, especially for small and medium-sized exporters.
  • Document checks often lead to discrepancies – with the risk of payment delays or rejections.
  • Many Brazilian companies have no experience with L/Cs – and receive no practical support from their house bank.
  • The result: even if a letter of credit is theoretically possible, it is often avoided in practice – by exporters and their banks alike.

Practice in Brazilian commodity trading: Letters of credit are unusual.

In day-to-day export business – especially in the raw materials and agricultural industries – the following applies:

  • Letters of credit are only used in exceptional cases, if at all.
  • Medium-sized exporters and trading agencies usually reject L/Cs because the costs exceed the benefits.
  • Foreign buyers who insist on a letter of credit often have difficulty finding a supplier who will accept it.

Instead, practical alternatives have been established, such as:

  • Partial payments as part of a SPA (Sales and Purchase Agreement).
  • Escrow Services / Trust Accounts.
  • Document-based payments (D/P or CAD).

These procedures are binding, comprehensible and better adapted to the Brazilian framework conditions – with a high level of security for buyers and sellers at the same time.

  • Conclusion: Letters of credit are not forbidden – but simply not practicable in Brazil.

“In Brazilian export practice, letters of credit (L/Cs) are hardly ever used, as processing via Brazilian banks is associated with considerable effort, delays and high costs. For this reason, VALIA Brazil offers alternative, secure payment models without L/Cs.”

Our offer: Secure payment without a letter of credit – with VALIA Brazil.

We offer you:

  • Partial payment systems with clear milestones
  • Contractual collateral (SPA)
  • Payment processing via escrow or cash against documents (CAD)
  • Transparent communication about payment dates, documents and approvals

This means you can import raw materials from Brazil safely, legally and in a spirit of partnership, even without an L/C.

Let’s talk payment – with VALIA Brazil.
Together we will find the right model for your project – secure, comprehensible and country-compliant.

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Tell us about your project

How we support your payment processing

  • Individual coordination of the payment structure according to project size, product type and delivery target
  • Creation of legally compliant payment agreements (e.g. in SPA)
  • Involvement of verified third-party partners for payment, escrow or insurance
  • Transparent communication about deadlines, proof and payment milestones
  • Advice on local conditions in Brazil and international standards

Frequently asked questions about payment processing (FAQ)

Yes and no. A letter of credit is generally permitted in Brazil, but is rarely used in practice. Only a few banks have the necessary experience, and processing is often expensive, bureaucratic and prone to errors. This is why many Brazilian exporters reject letters of credit.

Instead, VALIA Brazil relies on secure and practical alternatives – e.g. partial payments, escrow services or document-based payments (D/P). This gives you security without L/C.

We rely on transparent and internationally proven procedures: Depending on the project, secure partial payments (e.g. 30/70), escrow services or document-based payments such as D/P (Documents against Payment) are used. The exact payment structure is defined individually in the SPA contract (Sales & Purchase Agreement).

Very secure – as long as they are professionally structured. VALIA Brazil works with experienced partners, established payment service providers and clear contracts. Through stage models with proof of payment and delivery (e.g. via tracking & documentation), we offer maximum transparency and risk minimization – even without L/C.

Not in full. As a rule, an initial partial payment is made to bind the contract, e.g. after signing the SPA. The remaining amount is due after proof of production or shipment. Depending on the volume and partner structure, escrow payments are also possible, where funds are managed in trust.

D/P is a tried and tested method in foreign trade: the exporter hands over the shipping documents (e.g. B/L – Bill of Lading) to his bank, which only hands them over to the buyer once payment has been made. This ensures that the goods cannot be accepted without payment – a fair and widespread procedure for both sides.

Important: However, D/P is rarely used for first-time transactions or new business relationships – because in this model the exporter already bears the transportation risk up to the port of loading without having any payment security in advance. This is why D/P is usually only used for existing partnerships or after a successful credit check.

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