Import Letter of Credit
A standard, commercial Letter of Credit (LC) is a document issued by a financial institution, used in trade finance, which provides an irrevocable payment undertaking against submission of documents and compliance of other conditions as per LC terms.
Letters of Credit are used primarily in international trade transactions, for deals between a supplier in one country and a buyer in another.
We particularly recommend Letters of Credit in untested business relationships especially where:
- you want to avoid advance payment
- where you want to get credit from the supplier or
- when you order custom-made equipment
Benefits of using a Letter of Credit
- Simplifies business dealings with certain markets
- Simplifies the process of obtaining credit from the seller
- Possibility to control your shipment date and mode of transport
- Safer than advance payment
- Documents go via the bank
- Governed by international rules of the International Chamber of Commerce (ICC)
Additional Benefits Include
- Improved cash flow and liquidity
- Transfer of payment risk
- Flexible tenor – short to medium-term financing
- Limited or non-recourse financing possibilities
- Risk evaluation based on performance track record and collateral valuation