Letter of Credit
Letter of Credit (LC) is a major payment method in international trade because it benefits both parties in the transaction. As the buyer, you don't have to pay until the documents are received in good order. Your seller is also comfortable because they will definitely be paid if they have complied with the terms of the LC.
1. Trust because payment will only be made if:
• All stipulated documents are received in good order
• All the terms and conditions of the LC are complied with
2. Financing can be arranged for bills under LC
3. Reduced risk for both commercial and foreign exchange