In a letter of credit transaction, a letter of credit is a bank guarantee, usually issued by the buyers bank, guaranteeing that the buyer will pay the purchase price to the seller in accordance with the contract. The following are the clauses and requirements of a letter of credit:
How many types of letters of credit are there? Classification of letters of credit, how many types of letters of credit are there, and how to distinguish between them. Below is a detailed guide.
A letter of credit (L/C) is a document issued by a bank (the issuing bank) at the request and instruction of the importer (the applicant) to the exporter (the beneficiary), authorizing the exporter to draw drafts payable by the bank or the importer. Payment must be accepted and made upon presentation of drafts and documents in compliance with the L/C terms. The letter of credit is the most commonly used primary payment method in international trade.
This article provides a detailed introduction to the selection of foreign trade payment methods, including common methods such as Telegraphic Transfer (TT), Letter of Credit (LC), Documents against Payment (DP), and their respective advantages and disadvantages. By comparing different payment methods, it helps foreign trade practitioners choose the most suitable payment method based on transaction scale and customer situation to ensure safe and smooth transactions.
Even with settlement via letter of credit, exporters may still face the risk of refusal! How to choose a reliable issuing bank, deal with unjustified refusals, and take preventive measures to secure payment? This article explains!
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