What is confirming bank in SAP FIN-FSCM-TRM - Treasury and Risk Management?

SAP Term: confirming bank

• Component: FIN-FSCM-TRM

• Component Name: Treasury and Risk Management

• Description: A bank confirming that the letter of credit from another bank is genuine. By confirming the letter of credit, this bank assumes the same responsibilities as the issuing bank, including the obligation to pay against presented documents if all conditions specified in the letter of credit are met. This means that the beneficiary acquires promises to pay from two banks: the issuing bank and the confirming bank.

Smart SAP Assistant

• Key Concepts: 
  A confirming bank is a financial institution that provides a guarantee to a buyer and seller in a transaction. This guarantee is provided by the confirming bank to the seller that the buyer will pay for the goods or services they have purchased. The confirming bank also provides a guarantee to the buyer that the seller will deliver the goods or services as agreed upon. 
  
  How to use it: 
  In SAP Treasury and Risk Management, confirming banks are used to provide guarantees for transactions between buyers and sellers. The confirming bank will provide a guarantee to both parties that the transaction will be completed as agreed upon. This helps to reduce risk for both parties involved in the transaction. 
  
  Tips & Tricks: 
  When selecting a confirming bank, it is important to consider factors such as reputation, financial stability, and customer service. It is also important to ensure that the confirming bank is able to provide the necessary guarantees for the transaction. 
  
  Related Information: 
  Confirming banks are often used in international trade transactions, where there is an increased risk of non-payment or non-delivery of goods or services. Confirming banks can also be used in domestic transactions, where there is an increased risk of non-payment or non-delivery of goods or services.