Don’t You Know How An LC Funding Company Work For You? Read Through!

In a layman term, a letter of credit is a letter from a bank ensuring that a buyer’s payment to a seller that will be received within time and for the correct amount. In case the buyer is unable to make the payment on the time of purchase, then the bank will be required to cover either full or the remaining amount of the purchase. Owing to the nature of the international dealings, including factors like differing laws in each country, distance as well as difficulty in knowing each party personally, an LC Funding Company can turn out to be of extreme help.

As a letter of credit is generally a negotiable instrument, yet the issuing bank pays the beneficiary or any bank which is nominated by the beneficiary. In case the letter of credit is transferrable, then the beneficiary can assign another entity like a corporate parent or a third party, whoever is right to draw.

Banks usually need a pledge of either the securities or cash as collateral in order to issue a letter of credit. Also, banks collect a fee for the service, which generally a percentage of the size of the letter of credit. Citibank provides letters of credit for the buyers in Africa, Latin America, Asia, Eastern Europe and the Middle East who may have difficulty obtaining international credit on their own. Letters of credit offered by a reliable LC Funding Company are typically offered within two business days by guaranteeing payment by the confirming Citibank branch.