What is LC in shipping?
What is LC in shipping?
A letter of credit (LC), also known as a documentary credit or bankers commercial credit, or letter of undertaking (LoU), is a payment mechanism used in international trade to provide an economic guarantee from a creditworthy bank to an exporter of goods.
What is LC in supply?
A Letter of Credit [LC] is a way of funding purchases when the seller is reluctant to despatch the goods unless they have been paid for and the buyer is reluctant to pay unless they have received the goods. The buyer uses the Bill of Lading to take delivery of the goods from the carrier.
What is LC in import?
Understanding Payment by Letter of Credit An Import LC is one of the most secure methods of importing goods and it allows you to control shipping dates or facilitates a shipment schedule. An LC is a conditional payment guarantee provided by an Importer’s bank to the Exporter.
What is LC in import export?
An LC, also referred to as a documentary credit, is a contractual agreement whereby the issuing bank (importer’s bank), acting on behalf of the customer (the importer or buyer), promises to make payment to the beneficiary or exporter against the receipt of complying stipulated documents.
How does LC work in export?
Under sight LC, the payment of export proceeds sent to seller’s bank by buyer’s bank immediately up on receipt of original shipping documents as per the terms and conditions mentioned on LC. Once the buyer’s bank receives the documents, the export sales amount as per the said documents will be sent to exporter’s bank.
Can importer cancel LC?
The Importer cannot cancel an LC or change it without the agreement of all parties involved. The decision to pay is in the hands of the issuing bank, not the buyer. LCs do not guarantee the quality or quantity of the goods.
What is LC validity period?
LC expiry date means the last date to submit the exported documents with bank for negotiation of documents. Means, Letter of Credit is void if shipped goods before the date mentioned in LC for shipment, but not submitted documents for negotiation within the validity period of Letter of Credit.
How safe is LC?
Letter of credit is a safe mode of payment commonly for any business especially in international business also. Letter of credit is been known to be one of the safest payment options for importers in international trade transactions.