Reply To: Brief on who provides the letter of credit.

[Anonymous]

Letter of Credit (LC) reduces the risk associated with non-receipts. A payment guarantee given to the seller from the buyer’s bank is a letter of credit. Banks usually finance against LC, which reveals inborn security to the seller. It means that the bank takes charge of the payment. Besides letters of credit, banks offer other services like open account financing, supply chain finance, etc. A few trade finance firms also provide LC and supply chain finance. Such trade finance companies provide invoice factoring, structured trade finance, receivable discounting and various other customizable products.