Letter of credit (L/C)
A letter of credit (L/C) is a financial document issued by a bank on behalf of a buyer, guaranteeing payment to a seller upon meeting specific terms and conditions. L/Cs are commonly used in international trade to reduce risk and ensure secure payment transactions between parties.
Related glossary terms
Advising bank
An advising bank notifies the seller of a letter of credit's terms on behalf of the issuing bank. It confirms the LC's authenticity for the trade transaction.
Draft
Draft in international trade is a payment order payable at sight or at a future date. Learn how sight drafts, time drafts, and acceptance work in shipping.
Commercial Invoice
Commercial invoice is the document used to declare cargo value, parties, and terms for customs. Learn required fields, duties impact, and common mistakes.
Bill of Lading (BOL)
A bill of lading (BOL) is a legal document serving as a cargo receipt, title document, and shipping contract. Learn the types and how it differs from a waybill.
