LETTERS OF CREDIT


We source

LETTERS OF CREDIT

WHAT IS A LETTER OF CREDIT?



A letter of credit (commonly known as an LC) is a guarantee from a bank that a particular seller will receive a payment due from a particular buyer. The bank guarantees that the seller will receive a specified amount of money within a specified time. In return for guaranteeing the payment, the bank will require that strict terms are met. It will want to receive certain documents - for example shipping confirmation - as proof.


Why use a letter of credit?

Letters of credit are most commonly used when a buyer in one country purchases goods from a seller in another country. The seller may ask the buyer to provide a letter of credit to guarantee payment for the goods. The main advantage of using a letter of credit is that it can give security to both the seller and the buyer.


Advantages for sellers

By asking for an appropriate letter of credit a seller is reassured that they will receive their money in full and on time. A letter of credit is one of the most secure methods of payment for exporters as long as they meet all the terms and conditions. The risk of non-payment is transferred from the seller to the bank (or banks).


Advantages for buyers

When a buyer uses a letter of credit they get a guarantee that the seller will honour their side of the deal and provide documentary proof of this.

THE APPLICATION PROCESS FOR AN AT SIGHT LC


  1. Send us pro-forma invoice
  2. We will create a draft instrument and quote you our charges
  3. Once you have accepted the draft, we will send you indemnity documents which need to be signed and notarized by a lawyer.
  4. We will send you invoice for our charges.
  5. Once we receive our charges along with all indemnity documents, we will SWIFT the instrument to the beneficiary's bank immediately. Escrow account payable upon SWIFT of the instrument is acceptable. For escrow payments, we will request for a commitment fee along with Escrow administration charges.
  6. The beneficiary will send the goods to you and the documents to us.
  7. Once documents have arrived, we have 3 business days to act on it. We will send you a copy of the documents.
  8. Upon acceptance of the documents, you will be required to pay the beneficiary. When completed, we will send you all the original documents.
  9. Goods arrive.


CONTACT US

 
 
 
 
 

FIND US


Universal Trade Finance Ltd.


Kemp House

152 - 160 City Road

London

EC1V 2NX

Telephone: +44 208 050 4075

Email: info@universaltradefinance.com

Companies House Reg: 11778640