Important Fact About Letter Of Credit.docx

Letter of Credit A letter of credit (L/C) is a bank’s promise to pay to the exporter all the agreed value of the consignment on behalf of the foreign importer, provided that the exporter has complied with all the terms and conditions of the L/C. L/C is the most commonly used medium used for payment in international trade and is used to protect the interests of both the exporter and importer. Using L/C as a mode of payment helps to minimize the risk of transaction. L/C also adds to ensure, to both buyer and seller that the goods will be shipped within the time stipulated and the payment shall be made on time without undue delay.