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Payment Against Letter of Credit

Payment Against Letter of Credit

In the Payment Against Letter of Credit method, the importer's bank guarantees the payment of goods, upon the submission of the documents representing the goods and services, for which the details are specified in the conditions of the letter of credit. 

To get detailed information about Payment Against Letter of Credit and to make your application, you can visit our nearest branch.

Features

The exporter must dispatch the goods in full by the due date. Otherwise, the importer's bank will not make the payment.

Who can take advantage of this product?

  • SME's 
  • Commercial companies 
  • Corporate companies

Payment Against Letter of Credit for the Importer

  • For an import letter of credit to be issued for the company, an import credit line must be granted for the company by the bank. Upon complying with the requirements, all companies that import from overseas can take advantage of this credit facility. 
  • The company that is granted a credit is assured to receive the goods that will be imported in full and in good condition, without using any capital. 
  • With Import Letter of Credit Discount, term letter of credits can be discounted by the exporter's bank upon the agreement between the importer and exporter. The payment is made to the exporter before the due date upon the submission of the confirming documents, thus creating funds for the importer. This financing method is mostly used in cases where the importer wants to make deferred payments and the exporter wants to collect the payment of goods in lump sum. 

Payment Against Letter of Credit for the Exporter

  • Since the bank issuing the letter of credit will make payment in the case that the importer does not pay for the exported goods, the exporter gets assurance for the payment and thus the opportunity to expand into new markets more securely. 
  • If the exporter does not want to take the risk of the importer's bank, the exporter can request its own bank to confirm the letter of credit. 
  • With Import Letter of Credit Discount, upon the submission of required documents, the payment specified in confirmed or unconfirmed letters of credit issued for exporters can be made before the due date by being discounted by the bank. Thus, the exporter creates funds without using any cash credit. 

Letters of Credit Based on Type

  • Confirmed
  • Unconfirmed

Letters of Credit Based on Payment Method

  • Deferred
  • Acceptance Credit
  • Sight
  • Mixed Payment
  • Negotiation

Special Letters of Credit

  • Revolving
  • Red Clause, Green Clause
  • Back-to-Back
  • Transferrable
  • Stand-by