An irrevocable payment commitment.
As an importer you will have greater certainty that the products will be delivered correctly and on time.
The best means of payment for trade transactions within Europe and in the rest of the world.
Your trade receivables insured
Doing business with the Far East? Or concluding an agreement with a new trading partner in Europe? Then the Letter of Credit is the ideal solution. Even if you don't know the other party, you can do business safely.
- As a beneficiary you can count on the bank's commitment in respect of your payment with covering documents; you are therefore not dependent on the buyer's willingness to pay.
- This gives importers more peace of mind, as suppliers must submit certain shipping documents in order for them to be paid.
How does the Letter of Credit work?
The Letter of Credit (L/C) is an irrevocable payment commitment issued by the issuing bank. The payment process in five steps:
- The purchaser takes out a documentary credit with their bank; this is the issuing bank.
- The issuing bank agrees to pay the agreed amount pursuant to the terms and conditions of the Letter of Credit.
- The beneficiary then supplies in accordance with the contract and provides their bank with the requested documents.
- The beneficiary's bank checks the shipment documents and makes them available to the issuing bank.
- The issuing bank pays the agreed amount to the beneficiary.
Want to know more?
Please note, the Letter of Credit is a documentary credit. In other words: The payment commitment of the issuing bank has no value without the covering documents.
Do you want to find out more about all the aspects and the various Letter of Credit types? Please feel free to contact us, we will be glad to assist you.