Exploring the Different Types of Letters Of Credit

The Letters Of Credit is a written assurance made between the importers and exporters in which they settle down for the different payment procedures under the antagonistic conditions.

The Letters Of Credit is a written assurance made between the importers and exporters in which they settle down for the different payment procedures under the antagonistic conditions. In this letter, the clauses for the payments are mentioned. If the buyer of goods fails to make the payment, then the bank who has issued the fund, will pay to the sellers. The terms and conditions mentioned in this letter are said to be followed by each one of the subjected authority.

Letters of credit are available in the different forms. Some of them are mentioned below:-

Commercial Letters of Credit: These are the basic payment tools that stand out in international trade likewise import and export transactions. The numerous means of payment are utilized when a completes its duties.

Standby Letters of Credit: In these types of LC, the payment is sent to the beneficiary of the letters of credit.

Revocable Letters of Credit: They provides a special right to the issuer of canceling and amending of the credit without sending a prior notice to the beneficiary. Revocable LC are used often as they don’t provide any type of protection to the beneficiary.

Irrevocable Letters of Credit: Irrevocable LC have an exceptional feature- they can’t be canceled or amended without an agreement between the credit parties. The unconfirmed irrevocable LC cannot be altered without a written consent of issuing bank and beneficiary both whereas the confirmed irrevocable LC also require the written approval of the bank in order to make any modification or cancellation.

About Ashford Finance

Ashford Finance is the privately held organization which is managed by a group of trade finance along with the merchant banking professionals. They possess strong financial background as they have attained valuable knowledge in this field from the major U.S. financial institutions. A few of that we would like to disclose are Citicorp and GE Capital. Our major area of expertise to provide assistance for the different financial solutions for manufacturing and trading business. We amalgamate our extensive knowledge and expertise together to provide the best services to our customers. We are capable enough to address all your funding needs comprehensively.

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