Letter of Credit remaining document that a consumer or importer can apply for from his bank in order to agreement that the payment fro goods will be transferred to the supplier or seller. Fundamentally, a letter of credit gives the seller reassurance that he will receive the payment for the merchandise or goods. In order for the payment to occur, the seller has to submit the bank with the required shipping documents confirming the shipment of goods within a given time frame.
It is often use in international trade to eliminate risks such as unfamiliarity with the foreign country, customs, or political instability.
Types of Letters of Credit (L/C):
* Revocable Letter of Credit.
* Irrevocable Letter of Credit.
* Confirmed letter of Credit.
* Confirmed And Irrevocable Letter Of Credit.
* Transferable or Divisible Letter of credit.
* Back to Back letter of credit.
* Red clause Letter of credit.
* Sight Letter of credit.
* Usance letter of credit.
* Revolving letter of credit.
* Stand-by Letter of credit.