Definition
In simple terms, a letter of credit is an undertaking by a bank to make a payment to a named Beneficiary within a specified time, against the presentation of documents which comply strictly with the terms of the letter of credit.
Its main advantage is providing security to both the exporter and the importer, but the security offered however, comes at a price and must be weighed against the additional costs resulting from bank charges. The exporter must understand the conditional nature of the letter of credit and the fact that payment will not be made unless the terms of the credit are met precisely.

Key Benefits

• Secure, fast payment - other than payment in advance, L/Cs are the safest and fastest method of receiving payments
• Peace of mind - for the seller, L/Cs provide reassurance that they will get paid, provided their documents match the terms and conditions of the credit
• Opens new markets - L/Cs provide the safety net to trade in markets where open account trading may not be appropriate
• Customs and law - in some countries, law or tradition states trade must be supported by an L/C
• Worldwide standards - L/Cs are subject to the globally recognised International Chamber of Commerce, Uniform Customs and Practice (Latest version is UCP 600 ) for Documentary Credit guidelines
• Irrevocable - they cannot be revoked or amended without all parties agreeing to cancellation
• Electronic payments - L/Cs may be initiated electronically via your office PC.

Why Artac
Successive surveys have shown that well in excess of fifty percent of documents presented by exporters to banks for payment under letters of credit are rejected on the first presentation. This can cause expensive delays for both the exporter and the importer. It is fact that a great many of those rejections could be avoided if more care was taken to ensure that the documents called for in the credit are properly completed.

By using Artac you will enjoy the benefit of knowing that all the required documents will be issued by a team who are fully trained and conversant in UCP 600.
Furthermore, you will have the knowledge that the documents will be issued in a timely manner that will meet the presentation deadlines.
Your company will benefit by receiving payment quicker by having the documents promptly and your company will not incur additional fees for the presentation of discrepant documents.

For further information and for details of our service fees please contact one of our team.