Import Letter of Credit assists importers by reducing performance risks associated with buying from international suppliers. As an importer, you can be more secure knowing that the exporter must comply with the terms of the Letter of Credit in order to be paid.

Letter of credit advantages for the importer

  • The importer can monitor the time period for shipping of the goods, thereby the business can execute its business plan smoothly;
  • Importer can be confident that imported goods will be as specified and delivered at the agreed time and place;
  • By using letter of credit, the importer demonstrates his solvency; - It may enable the importer to defer the payment and negotiate at better price and terms;
  • Providing a letter of credit allows the importer to avoid or reduce pre-payment;
  • Importer can refuse to pay when exported goods do not meet all necessary requirements under LC terms and conditions with presentation of compliant documents;
  • No legal risk as it is regulated by ICC's “Uniform Customs and Practice”.

As an exporter, you may be concerned with the risks of selling to an international customer, especially a new one. An Export Letter of Credit gives you a measure of security and the assurance that you will be paid once you have shipped product and are in compliance with the terms of the letter of credit.

Letter of credit advantages for the exporter

  • The exporter has the obligation of importer's banks to pay for the shipped goods;
  • Reducing the production risk, if the importer cancels or changes his/her order;
  • The opportunity to get financing from the bank in the period between the shipment of the goods and receipt of the payment (especially, in case of deferred payment);
  • The exporter is able to calculate the payment dates to efficiently manage company’s cash flow;
  • Upon presentation of compliant documentation under the letter of credit, the importer will not be able to refuse the payment of the underlying goods;
  • No legal risk as it is regulated by ICC's “Uniform Customs and Practice”.