Cost, Pricing, and Payment - Standard letters of credit
5 important questions on Cost, Pricing, and Payment - Standard letters of credit
What is the Commercial or documentary Letters of Credit ?
The Letter of Credit is then sent to the supplier s bank of choice, called the advising bank. The advising bank checks to be sure that the Letter of Credit is authentic and delivers it to the seller.
What is Standby Letter of Credit ?
What means Collections/Bills of Exchange ?
The bank acts as an agent to forward the documents to the customer s bank and make presentation for payment.
less protection to the supplier but there are several advantages.
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What advantages are involved with Collections/Bills of Exchange ?
- supplier or its bank can retain title and control of the merchandise until the buyer has paid.
- Collections are far less likely to have errors in the documents than Letters of Credit.
- Both banks work for the supplier.
- The customers failure to pay does not affect the supplier s legal rights pursue collection or the supplier s credit insurance.
What is the disadvantage of letters of credit?
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