Letter of credit (L/C)

A Letter of Credit (L/C) is the standard document for documentary credit. Documentary credit concerns a process in which a bank, at the request of a buyer of goods, undertakes to pay the seller of the goods a specified amount, subject to production of a number of clearly defined documents and adherence to specific rules laid out in the L/C. the main benefit for the seller (shipper) is that he is sure to get his payment, and the buyer (consignee) can be sure that the seller will comply with all conditions stipulated in the letter of credit.