Search results
Results From The WOW.Com Content Network
That is to say, a letter of credit is a payment method used to discharge the legal obligations for payment from the buyer to the seller, by having a bank pay the seller directly. Thus, the seller relies on the credit risk of the bank, rather than the buyer, to receive payment.
The Uniform Customs and Practice for Documentary Credits (UCP) is a set of rules on the issuance and use of letters of credit. The UCP is utilized by bankers and commercial parties in more than 175 countries in trade finance. Some 11-15% of international trade utilizes letters of credit, totaling over a trillion dollars (US) each year.
A letter of credit is a written document from a bank guaranteeing the seller of a product or service will be paid as long as the goods or services are provided, as specified. Letters of credit are ...
Acceptance credit. An acceptance credit is a type of letter of credit that is paid by a time draft authorizing payment on or after a specific date, if the terms of the letter of credit have been complied with. The bank "accepts" bills of exchange drawn on the bank by the debtor, discounts them and agrees to pay for them when they mature.
Proof of funds. A proof of funds (POF) is a document such as a bank statement proving that a person or a company has the financial ability to perform a transaction or meet a potential future liability. The POF can be issued by a bank, a financial institution or a trade finance provider. For instance, a POF is generally obligatory for people ...
Demand guarantee. A demand guarantee is a guarantee that must be honoured by the guarantor upon beneficiary 's demand. The beneficiary is not required to first make a claim or take any action against the obligor of the guaranteed obligation that the guarantee supports. A demand guarantee is enforceable notwithstanding any deficiencies in the ...
An advising bank (also known as a notifying bank) advises a beneficiary (exporter) that a letter of credit (L/C) opened by an issuing bank for an applicant (importer) is available. An advising bank's responsibility is to authenticate the letter of credit issued by the issuer to avoid fraud. The advising bank is not necessarily responsible for ...
Definition[edit] I undid a recent addition to the L/C definition - A Letter of Credit can be used to pay any amount of money up to the value of the credit, and at any time up to and after the expiry of the credit (depending on the payment terms mentioned in the credit). Tightening the definition in the way that the change did doesn't aid ...