Today’s global economy mainly depends on overseas import and export business. But dealing with overseas traders means facing challenges that aren’t present when you are dealing with local traders. The biggest challenge is uncertainty in the payment and delivery of goods. And so, to mitigate the risks involved with global trade deals. ICC derives a trade finance product named Letters of Credit. Here, in this blog, we are going to discuss – LC Definition and How to Get Letters of Credit.
What is Letters of Credit?
Letters of Credit is the most popular international payment term which often used by traders to secure their global trade transactions. It is an irrevocable written undertaking issued by a bank on behalf of buyers to give payment assurance to the seller. Further, this LC ensures the seller that they will receive the payment, once they submit the documents to their bank as per the LC terms. Since banks release the payment only after the seller ships the goods, it assures the buyer that they will receive the goods, as per the agreed contract.
Further, as it assures both buyers and sellers in terms of payment and performance; LC is the most demanded trade finance instrument in the trade industry.
Open Letter of Credit from Good Repute Banks – Apply Now!
How to Get Letter of Credit from Bank?
As explained above, your bank is guaranteeing the payment towards the seller on behalf of your company. So, for this, in turn, banks will demand a certain guarantee from you in terms of cash margin or collateral. Usually, a certain margin amount will be blocked in your account to make the payment to the seller, once the goods are shipped. Also, this margin amount is purely based on the LC Value you required and also your relationship with your bank.
Further, in case, if you’re a new account holder and banks didn’t aware of your financial status means, it will not approve your request to open LCs. Also, to open the LCs from your bank, you may have a good relationship with a banker for many years; also they should know your capital and fixed assets.
For instance, if you were unable to meet the banking terms means, your LC request will be declined by your bank. And as a result, there is a chance of missing the trade deal which is yet to be signed.
So, to help traders who face issues in opening LC from their banks, we are here to help!
LC Process – Letter of Credit from Banks
Being Letters of Credit providers in Dubai, we assist buyers to conclude their trade deals without facing any issues by providing DLC from our bank account. We maintain a good relationship with our bankers for decades, and the bankers are well aware of our fixed assets. So, we can extend our bank facilities available in our bank account to open DLC on behalf of your company. Also, to provide LC, we will not demand any cash margin or collateral from your end. Moreover, our DLC Process is very easy and simple.
Submit your LC requests to us today and avail Letters of Credit from Good Rated Banks within 48hrs!
