Letters of Credit

Importers often use a ‘Letter of Credit’ or ‘L/C’ as a tool to protect their foreign supplier's interests and their own. In essence, a Letter of Credit is a bank’s guarantee of a payment for imported goods supplied. They are often requested by foreign suppliers as protection against default on the payment for goods provided.

Although UKForex does not issue L/Cs, we can assist you in saving money when you do the necessary foreign exchange transaction.

A straightforward Letter of Credit process would involve:

  1. Seller and Buyer agree on the terms of trade (items, price, shipping method, etc.).
  2. Buyer applies to a bank for a L/C to be issued.
  3. That bank sends the L/C to supplier's bank.
  4. The overseas supplier ships the goods to the UK importer.
  5. If the agreed upon terms are met, the issuing bank then pays the supplier.

At this point, UKForex can help. In most cases, the issuing bank debits the importer's Pound Sterling account and converts the funds to foreign currency at a rate it chooses in order to pay the supplier.

By instructing their bank to not debit their Pound Sterling bank account, an importer can make the conversion using UKForex instead. Payment would be made in foreign currency to the issuing bank, thereby giving you greater control over the exchange rate.

No extra fee is charged for this service, and the savings can be significant by using UKForex’s competitive foreign exchange rates instead of your banks.

Please complete the form below or click here to contact us for additional details.

 

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