What is a letter of credit?

letter of credit

StanTax is a provider of business loans, international project financing, bank guarantees, DLC BG and SBLC.

StanTax can help you obtain letters of credit to meet your financing needs for example of your inventory through our system of financing your orders.

StanTax your expert can work with clients to organize their letter of credit, performance guarantee requirements, cash payment requests and other commercial instruments, using our network of banking partners.

StanTax facilitates and manages the process of opening letters of credit on behalf of its clients and the day-to-day management of the transaction.

How to use your letter of credit

Letters of credit fulfill their mission by substituting the credit of the bank for that of the customer, in order to facilitate trade. There are two forms: commercial and standby.

The commercial letter of credit is the main payment mechanism for a transaction, while the standby letter of credit is a secondary payment mechanism.

Commercial letter of credit:

Commercial letters of credit are used to facilitate payment in international trade. Their use will continue to increase as the global economy evolves.

International transactions are governed by the International Chamber of Commerce’s Documentary Credit Rules.

The general provisions and definitions of the International Chamber of Commerce are binding on all parties. National collections in the United States are governed by the Uniform Commercial Code.

A commercial letter of credit is a contractual agreement between a bank, called the issuing bank, on behalf of one of its clients, authorizing another bank, called a counseling or confirmation bank, to make a payment to the beneficiary.

The issuing bank opens the letter of credit at the request of its client. The issuing bank undertakes to respect the drawings made with this credit.

The beneficiary is normally the provider of goods and / or services. Essentially, the issuing bank replaces the customer of the bank as a beneficiary.

What are the elements necessary to obtain a letter of credit?

  • A payment commitment given by a bank (issuing bank)
  • On behalf of a buyer (applicant)
  • Pay a seller (beneficiary) for a defined amount at the start
  • On presentation of specified documents representing the delivery of goods goods services.
  • In precise deadlines
  • The documents must comply with the terms and conditions written in the letter of credit.
  • Documents to be submitted at a specified place
  • For your financial needs think StanTax

About StanTax

Firm of consultants and specialists of 20 years of experience in tax optimization, creation of offshore company, professional bank account and in financial arrangements for investments.

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