Letters of credit
A letter of credit (LC) is a guarantee of your payment according to contract upon delivery of goods (or services) allowing for immediate payment against documents or necessary deferment of payment. An LC is your option to produce payment according to contract only after counteragents have fulfilled all obligations in regard of quality of provided goods (or services), deadlines and other contract terms.
Advantages of letters of credit:
- You have no limit in financing contracts to purchase goods from foreign manufacturers (raw materials, supplies and merchandise), as well as equipment and services from foreign partners, such as installation and start up of equipment, personnel training, engineering and consulting
- Your foreign partners receive 100 per cent of the payment according to contract terms upon delivery of goods and services and do not need to extend their own commercial credit or deferment of payment, thus reducing expenses
- Your risk of currency depreciation and commercial risk are reduced by conducting transaction with foreign providers of goods and services.