Accounting - What is Letter of Credit?

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What is Letter of Credit?

Total Answers and Comments: 7

Last Update: July 21, 2008 Asked by: ferozbm

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Submitted by: gopalakrishna

LC( Letter of Credit) is a set of documents which are very essential for goods being transported from one country to another. This set includes that of invoices, shipping documents, gurantees and others.

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September 28, 2006 04:17:34

gopalakrishna

RE: what is letter of credit?

LC( Letter of Credit) is a set of documents which are very essential for goods being transported from one country to another. This set includes that of invoices shipping documents gurantees and others.

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July 16, 2007 04:52:12

rama krishna

RE: What is Letter of Credit?

A letter of credit is offered by the banks which indicates that the customers ability (credit limit)

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July 23, 2007 11:54:28

Nishant Goel

RE: What is Letter of Credit?

A letter of credit indicates for the customers ability (credit limit) and in other words LC is a commitment from bank to the receiver for payment.

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July 25, 2007 03:37:23

Muralidharan J

RE: What is Letter of Credit?

Letter of credit is used in export/import of goods between two countries. It is essentially means that the bank on which the lc is opened is standing guarantee that the payment will be effected as per the lc terms which are pre-defined and accepted by the lc opener. When you do not know the credit worthiness of a customer you can insist for lc by which your payment is protected by the bank.

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August 10, 2007 08:58:58

Ravi Gaonkar

RE: What is Letter of Credit?

A letter of credit is offered by the banks. A letter of credit indicates for the customers ability (credit limit). It is very essential when goods being transported from one country to another. It includes invoices shipping documents guarantees etc.

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September 18, 2007 01:12:07

hanu_tuhin

RE: What is Letter of Credit?

Letter of credit(L/c) is a set of instructions given by the applicant to his Bank to transmit the set of instructions to the beneficiary of the L/c. The applicant's bank transmits the instructions to the beneficiary through its correspondant bank(basically advising bank) residing at the land of beneficiary. On acceptance of the terms & conditions by the beneficiary(else amendments are done) beneficiary tries to fulfill the terms & conditions. On satisfaction of the issuing bank the issuing bank reimburses the beneficiary through its reimbursing bank or directly.

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July 21, 2008 01:19:40

shoukath

Member Since: July 2008 Contribution: 3

RE: What is Letter of Credit?

When any company buying goods from overseas that time we need L.C. to open overseas goods. From that time Bank will give guarantee to supplier in behalf of Customer.

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