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Welcome to TFG’s Letters of Credit hub. Find out how we can help you access Letters of Credit to increase your imports and exports to guarantee the payment and delivery of goods – or discover the latest research, information and insights here.
Letters of credit (also known as documentary credits in the US) are a financial facility issued by a bank that effectively functions as a guarantee to the seller that the buyer in a transaction will pay on time.
Letters of Credit (LCs) are used to guarantee payments and facilitate trade, especially in international transactions. When a seller wants a guarantee that they will be paid, the buyer may offer a letter of credit. This acts as a commitment on the part of the buyer’s bank that payment will be received on time, even if the buyer is unable to make the payment themselves.
LCs are regulated by the UCP 600, a set of standards and regulations issued by the International Chamber of Commerce. Information about LCs is transmitted via the Swift messaging platform through one or more MT 700 messages.
There are several critical features of documentary credits/Letters of Credit (LCs):
Letters of Credit are crucial to facilitate trade all over the world and build trust between exporters and importers.
LCs are independent of the underlying transaction; banks will often ask the applicant (usually the buyer) to provide collateral before issuing a Letter of Credit. This means that banks will only deal with documents – not with goods, services or transactions to which the documents may relate.
The TFG team works with the key decision-makers at 270+ banks, funds and alternative lenders globally, assisting companies in accessing Letters of Credit.
Our international team are here to help you scale up to take advantage of trade opportunities. We have a team of sector specialists, from fuel experts to automotive gurus.
Often the financing solution that is required can be complicated, and our job is to help you find the appropriate trade finance solutions for your business.
Read more about Trade Finance Global, and how we can help you with your Letter of Credit queries, here.
Look no further. We’ve put together our feature insights, research and articles: you can catch the latest thought leadership from TFG, listen to podcasts and digest the latest news from the LC community right here.
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