Guide to Letter Of Credit: Definition, Types, and Procedure

Being a global businessman, you have probably heard or aware of the term "Letter of Credit". Today, the letter of credit has become a crucial and important part of international trade that soothes the smooth international transactions made by any businessman. What is it exactly? Find out. Guide to Letter Of Credit Well, a letter of credit is a document issued by one bank to another with a guarantee to pay a specified sum of money to the seller on behalf of the buyer. In simple words, if the particular buyer is not in a condition to pay the seller on time, the payment will be made by the bank. It is an important document in the case of international dealings and is one of the major financial services that are required by global businessmen. One of the most important & crucial functions of a letter of credit is that buyers and sellers both can reduce their risk and ensure on-time payment with the delivery of goods and services.