Letter of Credit Mode for Overseas Payment

The most commonly used payment method in international trade, especially in export/import, is the Letter of Credit Services. They are used to confirm the seller or beneficiary on the receipt of the goods or when the seller meets the requirement mention in the Letter of Credit set.  There are some terms & conditions mentioned in the Letter of Credit copy which they issue to their seller as soon as the order gets placed through the bank.  By issuing this copy, the seller can ensure to prepare the documents as per the instructions given in the Letter of Credit.

If the seller fails to meet the requirement of the buyer then the buyer has the rights to take a discount or deduct some percentage from the payment.

When any buyer issues any seller the Letter of Credit for the payment then seller must have to submit the relevant documents in the bank which are pertaining to the shipment or the goods as soon as seller dispatch them to our buyer.

The Bank plays a very important role in the Letter of Credit service, bank deal with the documents pertaining to goods and assures that each & every document are in order to proceed for the payments.

There are three main rules for Letter of Credit services:

• Bank deal with the complete set of documents
• Terms & conditions mentioned in the Letter of Credit are mandatory to follow.
• Conditions mention on Letter of Credit will not depend on any agreement earlier made between the parties.

Letter of Credit is a secure way for payments in mainly export/import business and used widely by many exporters.

In some cases when the seller fails to follow the conditions mentioned in the Letter of Credit & and buyer denies to make the payment then Bank Guarantee Services will help to cover the loss.

When a company takes the responsibility to pay the financial obligations of any other company when it fails to complete its obligations then it will be called as Financial Guarantees.  Financial guarantee is a very important instance for security it adds one extra layer of security in such cases.