Letter of Credit is a written document by an importer’s bank assuring the seller receives payment on fulfilling agreed terms and submitting LC documents. Letter of Credit (LC) A Letter of Credit (LC) is a document that guarantees the buyer’s payment to the sellers. Businesses widely use this assured form of payment in trade transactions. It is issued by a bank and ensures timely and full payment to the seller. If the buyer cannot make such a payment, the bank covers the full or the remaining amount on behalf of the buyer. This document minimizes the risks in international trade for both the buyer and seller. A letter of credit is one of the ... What is Letter of Credit ( LC )? Letter of Credit ( LC ) is the most secured and widely used form of international trade transaction method. An LC is a commitment on behalf of the importer by a bank in the importer’s country that the payment will be made to the exporter if he meets the terms and conditions as stated in the LC . Explore what letters of credit are, their types, costs, and real-world examples to understand their role in facilitating secure international trade.
