A letter of credit is an irrevocable written commitment to pay money. Once your goods are shipped out to the buyer and your documents in conformity with the letter of credit are present to the bank, you can have assurance that payment will be forthcoming from the bank which issued the letter of credit. It can also work the other way round, assuring that the supplier you are buying from will receive payment from you.

Standby Letter of Credit

To protect your company’s good name and reputation, it is crucial to give assurance to your suppliers in that they will receive your payment. A standby letter of credit from SBC Bank gives you the support you need. It can be issued as an alternative to a financial guarantee or act as bid or performance bonds. This has all the characteristics of a guarantee except that it must have an expiry date, which can be extended, at regular intervals at the option of the exporter, to satisfy the requirements of the buyer.

Transferable Letter of Credit

When importing goods, the exporter may be an agent or middleman for the actual supplier of the merchandise. This situation often requires a transferable letter of credit. With a transferable letter of credit, the exporter uses the credit standing of the issuing bank and avoids having to borrow or use his own funds to buy goods from a supplier. Hence, it is a viable pre-export financing vehicle. SBC Bank provides this financial tool and can handle all of the required documentation and certificates necessary to reduce risk in these transactions.

For more details on letter of credit, please contact our international trade specialist @ 023 – 211 211

Letter of Credit Application Form

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