Garment exporter view on letter of credit

Letter of credit is as ‘documentary credit’. This can offer a guarantee to the seller that they will be paid, and the buyer can be sure that no payment will be made until they receive the goods. The main advantage of using a letter of credit is that it can give security to both the seller and the buyer. A letter of Credit is the Buyer’s Banker’s promise to the Bank of the Seller / Exporter that the bank will honor the Invoice presented by the Exporter on due date and make payment, provided that the Seller/Exporter has complied with all the requirements and conditions set by the Importer mentioned in letter of credit or the Buyer’s Purchase Order and produced documentary evidence to prove compliance, along with the necessary shipment related documentation