Letter of Credit (LC)

A letter of credit (LC) in international trade is a financial guarantee issued by a bank on behalf of the buyer, ensuring that the seller will receive payment once certain conditions are met. It provides security to both parties in a transaction, particularly when dealing with international buyers and sellers who may not have an established relationship or trust. The buyer’s bank issues the LC, which serves as a promise to pay the seller once they present the required documents, such as proof of shipment, by the terms outlined in the agreement.

The LC is fully integrated into CargoWise’s financial and document management systems, enabling smooth tracking of trade documents and payments. This connection guarantees that overseas shipments and payments are coordinated, with all essential documentation checked to satisfy the requirements of the LC. Businesses can utilize CargoWise to automate the LC process, increasing productivity, lowering risk, and ensuring trade compliance. The LC system protects both the buyer and the seller from nonpayment or nondelivery, making it a dependable means to conduct international transactions.