Why use a letter of credit?
Letters of credit are among the most secure methods of settlement, and are internationally recognised. Import and export letters of credit are legally binding. They cannot be cancelled unless all parties agree.
Import letters of credit reassure your overseas suppliers about receiving payment and they assure you about the receipt of your goods from overseas before you pay. We commit to payment on your behalf via a pre-agreed credit facility. But we only pay once documentation submitted by the exporter complies with the terms of the import letter of credit. This gives you confidence that the goods you buy will be as ordered, and they will be delivered at the agreed time and place.
Export letters of credit are beneficial if you are selling and you want to ensure payment for your goods - especially if you are dealing with a new market, country or trading partner. Export letters of credit are payment commitments given by your buyer’s bank providing that you fulfil the terms and provide the documentation as required within the letter of credit.
Where you require additional comfort – maybe when exporting to developing countries – we may consider ‘confirming’ the letter of credit. This means that, subject to the terms of the letter of credit being met and all documents being in order, we'll guarantee payment in the event that the buyer’s bank is unable to.