A Letter of Credit [L/C] is a popular business way for importers to ensure that they receive the goods that they are paying for and for sellers to receive payment for those goods.

Overseas suppliers normally insist on payment for goods in advance to protect them from default on payments. Letter or credits are applied for by the purchaser’s bank from the supplier’s bank. The supplier’s bank guarantees that goods will be delivered.

Supplier sends goods. Once terms are met the purchaser’s bank pays the supplier.

1. Buyer and seller agree terms of trade (price, specification, shipping etc.).
2. Buyer applies for L/C from issuing bank.
3. Issuing bank sends L/C to supplier's bank.
4. Supplier sends goods to importer.
5. Assuming agreed terms are met, issuing bank pays supplier.

Here is how TransferMate helps

Normally, the seller’s bank would debit the importer's account in their local currency, and convert it at the bank's chosen rate to pay the supplier in the foreign currency. By advising their bank not to proceed with the debit of their bank account, an importer can have TransferMate make the conversion. Payment would then be made to the seller’s bank in the foreign currency. TransferMate does not charge extra for this service, and savings can be substantial. Payments for L/Cs still attract the same competitive TransferMate rates.

Contact our team today for assistance:

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