Glossary · Trade terms & payment

Letter of Credit (LC)

A bank's promise to pay the exporter when it presents documents that match the credit's terms.

What is Letter of Credit (LC)?

The buyer's bank issues the LC; the exporter ships and presents the bill of lading, invoice and other required documents. If they comply exactly, the bank pays. Small discrepancies, such as a late shipment date, can delay payment.

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