Letter of Credit Definitions

1. A document issued by a bank that guarantees the payment of a customer's draft; substitutes the bank's credit for the customer's credit
2. A standard, commercial letter of credit is a document issued mostly by a financial institution, used primarily in trade finance, which usually provides an irrevocable payment undertaking.
3. A credit facility provided by a bank.
4. A common means of payment in international trade, this is a written commitment by a bank to make payment to an exporter on behalf of an importer, under specified conditions.
5. A letter issued by an importer's bank guaranteeing payment upon presentation of specified trade documents (invoice, bill of lading, inspection and insurance certificates, etc.).
6. An obligation issued by a bank on behalf of a bank customer to a third party. There are many different kinds of letters of credit. The two most common are commercial letters and standby letters. ...
7. This is an obligation to pay by a third party, as a guarantee of confirmed funds. A Letter of Credit may be used to improve the credit-worthiness of an entity with no or low credit ratings.
8. A letter generated by a bank to a seller that authorizes a draft payment for a specific amount based on meeting a predefined set of terms (an exact description of the goods, services and quantities).
9. A financial guarantee issued by a bank that ensures that funds will be available if requested.
10. A method of payment for goods in which the buyer establishes his credit with a local bank, clearly describing the goods to be purchased, the price, the documentation required, and a time limit for completion of the transaction. ...
11. A letter, usually from a bank, requesting a person or company to extend credit to a certain person or company and guaranteeing payment. Most commonly used in the purchase of good from another country. The letter may be revocable or irrevocable, but most parties insist on the irrevocable.
12. A financial guarantee provided by a bank that permits the party to which it is issued to draw funds from the bank in the event of a valid unpaid claim against the other party. ...

Kindly Bookmark this Post using your favorite Bookmarking service: