Letters of Credit
What is a Letter of Credit?
It is a very safe and secure way for an exporter to ensure that they get paid and for an importer to ensure they receive the goods ordered, on the condition that certain agreed terms are met.
Governed by International Chamber of Commerce (ICC) publication UCP 600 they are an internationally recognised method of payment. Whilst significantly reducing risk they can however be expensive both in terms of bank charges but also in the amount of time required for paperwork. This is why, with many years experience of dealing with Letters of Credit, Your Export Department Ltd. are able to provide a full letter of credit handling service to companies who want to use this secure method of payment but without all the burden of paperwork and time investment.
When obtaining a Confirmed Letter of Credit the exporter is essentially passing the payment risk on to their bank. The banks deal in documents and not the goods or services that the exporter is providing. This is why the documentation in a letter of credit is so vital and why a good understanding of the impact of the terms in each of the fields of a letter of credit is so important for both exporter and importer.