L/C letter of Cridit , is a Banking/Commercial term used for Payment mostly overseas or foreign payement.
I donot know any more about it.
but following question clicks my mind about L/C
If you have informations please guide me .
Re: What is L/C how it Works?
Letter of Credit is usually used in overseas businees transactions. It's the safest and most reliable since the banks are involved and assure you of your payments.
-L/C is Usually perfered over other payment methods like Documentary Collection,open account,credit card etc.
-L/C is expensive method and it is advisable to choose it only if you are dealing with big amount.
you can google some other info to study in detail.
Letter of Credit is a binding legal document that a buyer can request from his bank in order to guarantee that the payment for goods will be tranferred to the seller.
Basically, a letter of credit gives the seller reassurance that he will receive the payment for the goods. In order for the payment to occur, the seller has to present the bank with the necessary shipping documents confirming the shipment of goods within a given time frame.
It is often used in international trade to eliminate risks such as unfamiliarity with the foreign country, customs, or political instability.
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2. What are financial Costs for L/C establishing and Maintenance ?
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1 - 8% of face value of L/C normally, it can more depending on the transaction, types of goods & location.
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3. Could it be prefered upon other payment methods ?
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Nope !
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4. Validity etc.
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I have seen L/C more then 5 years old !
1 - 8% of face value of L/C normally, it can more depending on the transaction, types of goods & location.
Thank You very much , you have given a very good sketch of L/C and I will go for google search too (as you recommended).
By the way , this 8% charges are once or on Monthly/Yearly basis.
Re: What is L/C how it Works?
^ Nope its not monthly / yearly basis, its on the complete L/C amount !