Want A Thriving Business? Focus On Letter Of Credit

In international trade, Letters of credit are one of the significant factors and essential payment methods. It is a secure, famous, and universal way of payment globally. However, in the international trading business, there are a few concerns between the buyers and sellers. They face challenges during import-export. It is because, most of the time, they live in different countries.

Buyers fear the quality and quantity of the product, and the sellers are worried about the budget. Well, Letters of credit helps in such issues.

The Importance of Letter Of Credit in Businesses

In this international trade, the importer must secure a letter of credit (LC) through a bank. The bank works as a guarantee on behalf of the importer. It ensures the value of goods shipped by the exporter. 

The letters of credit are beneficial and accepted worldwide as the means of payment for universal transactions. For the buyer, a loan document gets issued by the bank, which promises the settlement of the seller's bill.

However, if you want to transport or import goods from different countries, a letter of credit will come in handy.

As a beginner, if you are new in the trading business or need help, consult with an expert. The professionals have the knowledge to deal with your issues within a limited time.

What Are The Different Types Of Letters Of Credit?

You can divide letters of credit into different types according to your needs. For example - Revocable L/C, Red Clause L/C, Ad-Confirmed L/C, Irrevocable L/C, Revolving L/C, Transferable L/C.

If you want to get a permission for Letter of Credit, documents you will need to do the following:
First thing first, to open an L/C, you must have a bank account. Then, these are the following documents that the bank asks for:

• A legitimate bank account in the name of your company
• Charge documents
• Valid/revised trade license of your company
• Export LC (for back to back LC)
• IRC (Import Registration Certificate)
• VAT (Valued Added Tax) Certificate and Valid / Updated Tin (Tax Identification Number).
• Exporter's credit report
• LCF (completed and signed)
• Indent / Proforma Invoice.
• Insurance cover note (with money receipt).
• IMP Form (Filled and Signed)

Why Do You Need The Help Of Financial Institutes?

The process of letters of credit can get complicated. Hence, you need to hire a service that helps bonafide clients and companies regarding trade-based business.

With the rapid growth in trade-business in the import and export industry finance plays a tremendous role. The financial institutes offer security to both the buyer and sellers to do the business across the borders.

Here You Can Go For Letters Of Credit

For more info on Letters of credit, contact Merchant Finance and Guarantee Corporation (MFG). They serve their clients with dedication. They have knowledge and years of experience. Visit merchantfinancecorp.com today!