Letter of Credit

Import and Export Letter of Credit: Importance and Key Feature

What is an Import Letter of Credit? When a business conducts international trade, there are numerous different steps and procedures that they need to follow in order to safeguard themselves against possible litigation-related charges. In this regard, it is also imperative for organizations to work alongside different banks and financial institutions to ensure that they …

Import and Export Letter of Credit: Importance and Key Feature Read More »

Back to Back Letter of Credit: How does it work? Definition, Advantages, And More

It is the form of documentary credit where the first party uses a letter of credit to secure another Letter of Credit facility. It uses two letters of credit for one financial transaction. The sellers use this option to secure a credit facility by pledging the credit received from the buyer’s bank. It may work …

Back to Back Letter of Credit: How does it work? Definition, Advantages, And More Read More »

Letter of Credit Discounting: How Does It Work? Advantages, Advantages, and Limitation

Letters of credit facilitate international trades between unknown parties. An LC reduces the trust deficit between the seller and buyer. However, the clearance of funds with documentary credit often takes a long time. The sellers use the discounting of LC in their favor to receive short-term financing. What is the discounting of a Letter of …

Letter of Credit Discounting: How Does It Work? Advantages, Advantages, and Limitation Read More »

Transferrable Letter of Credit: How Does It Work? Criteria, Features, Pros, and Cons

A transferable letter of credit provides the option of transferring the credit to a second beneficiary. The first beneficiary of a letter of credit is the seller (exporter). A transferrable LC allows the transfer of approved credit partially or in full to another party. A transferrable documentary credit is used often in agreements where the …

Transferrable Letter of Credit: How Does It Work? Criteria, Features, Pros, and Cons Read More »

Letter of Credit Vs. A Standby Letter of Credit (SBLC): What Are the Main Different?

Introduction A letter of credit is the instrument in which a bank guarantees the payment to the alternative party in case of default by the account holder to the issuing bank. In other words, it provides a guarantee to the other bank involved in the transaction as well as his client that it assures the …

Letter of Credit Vs. A Standby Letter of Credit (SBLC): What Are the Main Different? Read More »

A commercial letter of credit: Definition, Purpose, Types, and More

Definition: International trade in such a diversified world is very difficult to manage because one cannot easily trust on the party located at the opposite side of the globe. A commercial letter of credit like other instruments facilitates the international trade between two different geographically distant countries of the world because this instrument ensures both …

A commercial letter of credit: Definition, Purpose, Types, and More Read More »

A standby letter of credit (SBLC) vs Bank guarantee (BG): Detail Explanation

Introduction Standby letter of credit is the guarantee provided by the issuer bank or financial institution that the responsibility of payment will be transfer upon the non-payment of party to the contract. In this type of instrument, the issuing bank will have to follow all the banking protocols followed by the bank. However, in case …

A standby letter of credit (SBLC) vs Bank guarantee (BG): Detail Explanation Read More »

Confirmed letter of credit: Purpose, Types, Explanation, and More

Introduction Confirmed letter of credit is an instrument which facilitates the international transactions between the willing buyer and willing seller, who live in geographically distanced places and in almost all the cases in two different countries of the globe. Both the parties to the transactions are in fear that they will not be able to …

Confirmed letter of credit: Purpose, Types, Explanation, and More Read More »

Scroll to Top