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  1. Dictionary
    letter of credit

    noun

    • 1. a letter issued by a bank to another bank (especially one in a different country) to serve as a guarantee for payments made to a specified person under specified conditions.

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  2. www.investopedia.com › terms › lLetter of Credit: What It Is, Examples, and How One Is Used

    May 24, 2024 · A letter of credit is a letter from a bank guaranteeing that a buyer’s payment will be received on time and for the correct amount. Here’s how letters of credit work.

    • Julia Kagan

  3. www.bdc.ca › export › what-is-a-letter-of-creditWhat is a letter of credit? | BDC.ca

    A letter of credit is essentially a financial contract between a bank, a bank's customer and a beneficiary. Generally issued by an importer’s bank, it guarantees the beneficiary will be paid once the conditions have been met.

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  5. corporatefinanceinstitute.com › letter-of-creditLetter of Credit - What It Is, When To Use It Examples

    A Letter of Credit is a form of guarantee issued by a bank on behalf of its client. An LC is used when trust between counterparties is hard to quantify. The instrument is especially common in global trade among partners in different countries.

  6. en.wikipedia.org › wiki › Letter_of_creditLetter of credit - Wikipedia

    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.

  7. www.thebalancemoney.com › what-is-a-letter-ofWhat Is a Letter of Credit? - The Balance

    May 30, 2022 · A letter of credit is a written agreement between seller, buyer, and banks regarding terms and conditions of payment for goods or services. Letters of credit help to minimize risk for both the buyer and seller and are prevalent in international trade.

    • Ella Ames

  8. www.investopedia.com › ask › answersTypes of Letters of Credit - Investopedia

    Mar 7, 2024 · A letter of credit is an assurance or guarantee to sellers that they will be paid for a large transaction. Letters of credit are particularly common in international or...

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  10. www.sofi.com › content › what-is-a-letter-of-creditWhat Is a Letter of Credit and How Does it Work? - SoFi

    Aug 28, 2024 · A letter of credit is a document from a bank or financial institution guaranteeing that a buyer’s payment to a seller will be made on time and for the correct amount. As part of a sales agreement, a seller may require the buyer to deliver a letter of credit before a deal takes place.

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