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(LC) Letter of Credit

Letters of Credit are important instruments in international trade which guarantee that an exporter will receive payment for their goods and services. Letters of Credit are issued by the issuing bank and are particularly useful when the parties do not know each other well or trade valuable assets.

There are several types of letters of credit, namely export or import letter of credit which are important for international trade. Importers and exporters generally need intermediaries, like banks or non-banking financial companies to ensure payment and timely delivery.Both the export and import letter of credit is substantially similar, only the perspective is different. An import letter of credit increases the trustworthiness of the importer while an export letter of credit eases the credit risk for the exporter and helps recover cash flow.

If an exporter is concerned that a foreign buyer will not pay as agreed, the risk can be mitigated by asking the buyer to contact their bank, so the bank can grant and issue a Letter of Credit for the benefit of the exporter. A Letter of Credit entails that the buyer’s bank is obliged to pay the purchase amount on certain conditions.

Greniva Holdings AG in its capacity offers Letter of Credit to a vast number of clients from countries across Asia, Middle East, North & South America, European Union and Africa.