Letters of Credit

A documentary letter of credit is one of the most secure payment instruments in international trade, in the import and export of goods.

A letter of credit is a obligations of the issuing bank to pay to the exporter on behalf of the importer upon complying presentation of the documents mentioned in the letter of credit.


For the importer

  • A documentary letter of credit helps the importer minimise the risk the exporter not to deliver the goods.
  • It guarantees that payment will be executed upon presentation of the documents confirming shipment of the goods.
  • It allows the importer to structure the payment according to the contract and their needs.
  • It shows solvency and ability of the importer to negotiate favourable terms in future.

For the exporter

  • It guarantees payment upon complying presentation of documents.
  • It minimises production risk if the buyer cancels or changes the order.
  • It allows the exporter to structure the delivery in accordance with their interests.
  • The importer may make claims on goods received outside the letter of credit, which gives the exporter a guarantee that they will receive the full payment for the goods delivered without further deductions.