Use a letter of credit when importing or exporting | |
A letter of credit (or documentary credit) is the most secure and convenient payment method for international transactions. It is a document issued by a bank guaranteeing an importer’s ability to pay for goods or services.
A bank issues a letter of credit on behalf of an importer, authorising the exporter to obtain payment within a specified timeframe provided the conditions outlined in the letter of credit are met. The letter of credit acts like an insurance contract for the importer and exporter - virtually eliminating the credit risk for both parties, while at the same time reducing payment delays.
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