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What is letter of Credit L/c ?

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Old 06-14-2008, 01:35 AM
KungFu KungFu is offline
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Default What is letter of Credit L/c ?

LC is Letter of credit. It is a form of a cheque, it's a cheque that your seller prefers receive from you bank and it's guarantee rather than personally from you or your company. bank acts as the middle man in your transaction to safe guard you and your supplier. the bank will check if the documents along with the goods you suppler has sent are in perfect order, then only the bank will release the payment to you supplier.
It's simple. you need to go and meet up with Imports and exports division in your bank. they will have a set of forms to be filled. you will have to take the Proforma invoice which your supplier sent you for his payment. you present that to the bank along with the set of forms that the bank gave you to fill. Then the bank will prepare their set of documents and send to your suppliers bank for confirmation there is a LC opened for the supplier.
once your supplier sends you the goods and the set of documents directly to you which should include 3 sets of bill of lading,packing list,commercial invoice. you may have to take it to bank or directly to port where the good have arrived (Depends from country to country regulations on documentation) then double check with goods and your cleared and your bank will ask you suppliers bank to pay supplier.
Good luck!
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Old 10-31-2017, 08:17 PM
damponting44 damponting44 is offline
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A letter of credit is a letter from a bank ensuring that a purchaser's installment to a dealer will be gotten on time and for the right sum. If the purchaser can't make installment on the buy, the bank will be required to cover the full or remaining measure of the buy.
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