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Standby Letter Of Credit – The Ultimate Solution For Trading

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Standby Letter Of Credit – The Ultimate Solution For Trading

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  1. Standby Letter Of Credit – The Ultimate Solution For Trading

  2. The standby letter of credit is a popular solution to this problem. It refers to the legal binding of the agreement which is made between the buyer and the seller as a guarantee for the payment and the goods delivery. The issuer of this SBLC is the bank or any other financial institution which provides this document based on the request from its client. This guarantee will be provided by the financial institution only after the proper verification. 

  3. Understanding the use of standby letter of credit:Usually during the international trading for the security for cash and goods financial instruments are widely used. They allow the trust within the trade such as the ability to re-pay the amount involved in the process and the quality of the goods. This guarantee for the payment issued by the bank can be used at the worst-case when the buyer couldn’t pay the amount. It also acts as the guarantee for the buyer with the quality and quantity of the goods received. 

  4. common advantages of using the letter of credit are:Security – Provide trading partners with the trust to establish their trading. • Customization – The letter of credit can be customized based on the requirements of both the partners. • Reduced risk – Most of the time, people get worried about the trading due to risks involved in it. This letter of credit reduces the risks involved in the trading so that both the partners can get good experience. • Quick to execute – It is easy to get the letter of credit from the financial institutions if the documents are properly submitted by the client. After verification, the bank will issue the SBLC.

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