Understanding Payment by Letter of Credit
An Import LC is one of the most secure methods of importing goods and it allows you to control shipping dates or facilitates a shipment schedule. Many Exporters will not provide goods unless they receive payments in advance or are guaranteed payment by a bank. An LC is a conditional payment guarantee provided by an Importer's bank to the Exporter. The payment guarantee is conditional upon the Exporter providing documentary evidence of the shipment of goods in accordance with the terms of the LC. Import LCs are subject to credit approval.
How Does The Process Work?
The Importer's bank will guarantee the payment to the Exporter either immediately upon receipt of the correct documents or at some future determinable date e.g. 60 days from sight (by the bank) of the shipping documents or 90 days from Bill of Lading date. LCs are issued subject to the Uniform Customs and Practice for Documentary Credits issued by the International Chamber of Commerce.
Steps 1-4 (Issuance)
High volume users of LCs can benefit from our online TradeAccess portal.This is designed to assist Importers in the convenient, efficient and secure management of their LCs online. With the streamlining and automation of International Trade activities, this will ultimately deliver greater control over country, commercial or performance risks.
For further information please contact your Relationship Manager or our Trade Finance team.