Email Address :- akram@stgeorgecommercial.co.uk
Letters of Credit
Letters of Credit
A Letter of Credit (LC) is a widely used trade finance instrument that guarantees payment from the buyer’s bank to the seller, provided that all terms and conditions in the LC are met.
Letters of Credit are especially useful in international trade, where trust and risk mitigation are crucial. They offer protection to both exporters and importers by ensuring that funds are only released when agreed documentation is presented—such as shipping documents, invoices, or inspection certificates.
Types of Letters of Credit:
Revocable/Irrevocable LC
Confirmed LC
Sight LC
Usance LC
Transferable LC
Back-to-Back LC
Benefits:
Reduces payment risk
Encourages smoother international transactions
Ensures compliance through document verification
Offers financing options for both parties
Process of Letters of Credit
Agreement & Application
The buyer (importer) and seller (exporter) agree on the terms of the sale. The buyer applies to their bank to issue a Letter of Credit in favor of the seller.
Issuance & Confirmation
The buyer’s bank (issuing bank) sends the LC to the seller’s bank (advising or confirming bank), verifying the buyer's ability to pay and the terms under which payment will be made.
Shipment & Documentation
The seller ships the goods and submits the required documents (e.g. bill of lading, commercial invoice) to their bank, proving that shipment complies with the LC terms.
Verification & Payment
The advising bank verifies the documents and forwards them to the issuing bank. If all documents are in order, payment is released to the seller. The buyer then receives the shipping documents to collect their goods.
Letters of Credit Enquiries
Contact Information
If you have a finance enquiry, please use the contact form.
Otherwise, you can reach us on the email addresses below.
St. George Commercial finance Brokers Limited
11 Curtis House,
34 Third Avenue,
Hove,
BN3 2PD
07958 710 010
01273 855 711
01273 855 710
Letters of Credit
Letters of Credit are secure payment instruments used in international trade, ensuring sellers get paid upon meeting conditions. Issued by banks, they reduce risk for both buyers and sellers.
What is a Letter of Credit?
A Letter of Credit (LC) is a bank-issued guarantee that ensures a seller receives payment from a buyer, provided that agreed documents and conditions are met.
Who uses Letters of Credit?
Importers, exporters, manufacturers, and traders commonly use LCs in international transactions to reduce the risk of non-payment or non-shipment.
What documents are required to draw on an LC?
Typical documents include a commercial invoice, bill of lading, packing list, insurance certificate, and any other documents specified in the LC terms.
What types of Letters of Credit exist?
Common types include Commercial LC, Standby LC, Confirmed LC, and Transferable LC — each serving different levels of risk protection and transaction flexibility.
How long does it take to issue a Letter of Credit?
Once all terms are agreed upon, an LC can typically be issued within 2–5 working days, depending on the complexity of the transaction and the bank’s processing time.
