Letters of Credit (aka documentary credits)
Offering security to both buyer and seller, Letters of Credit (AKA Documentary credits) are honoured through the global banking system
Spatial Global is highly experienced in the management of Letters of Credit.
Letters of Credit (also known as documentary credits) are one of four principal mechanisms for settling international trade debts – the others being bills of exchange, open accounts and advance payments.
They are undertakings by an issuing bank, on behalf of a buyer/importer, that payment will be made for goods or services supplied by a seller/exporter, provided that the seller complies with certain terms and conditions. In this event, if the buyer is unable to make the payment then the bank will cover the outstanding amount.
Letters of Credit tend to be used to ensure that payment is received when buyer and seller do not know each other, and usually where they are in different countries. In some jurisdictions, settlement by Letter of Credit is insisted upon by the local authority, which may wish to control imports or the associated outflows of foreign exchange.
Spatial is highly experienced in the management of Letters of Credit, and employs specialist staff trained by the banks to advise on their preparation and presentation up to the point they are paid.
Letters of Credit are one of the most popular methods for settling international trade debts.
See also Other freight/shipping documentation.