Letters of Credit
A documentary credit that pays your supplier, or secures your receivable, once the agreed documents are presented in order.
What a Letter of Credit does
A Letter of Credit is an undertaking by the issuing bank to pay the beneficiary a stated amount when documents that comply with the credit's terms are presented within its validity. The buyer's bank, not the buyer, becomes the party the seller relies on for payment.
For the importer, it means goods are paid for only when the shipping and commercial documents match what was agreed. For the exporter, it means a bank of known standing has committed to pay before the goods leave the port.
Finance House prepares the credit with the issuing bank, aligns the wording with your sales contract, and checks that the documentary conditions are ones your counterparty can actually meet.
How Finance House arranges it
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Review the contract
We read the sales contract and shipping terms to define amount, tenor, documents and the confirming bank if one is needed.
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Draft the credit
We produce the application and draft wording so that the credit reflects the contract precisely.
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Bank issuance
The partner bank approves and issues the credit, advising it to the seller's bank by SWIFT.
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Documents and payment
We support document checks and any amendments through to payment or acceptance.
Where it is used
New trading relationships
When buyer and seller have no track record together, the credit substitutes bank commitment for trust.
Commodity and bulk trade
Large shipments where payment must be tied to shipping documents and inspection certificates.
Regulated markets
Jurisdictions where exchange control or transfer risk make open-account terms impractical.
Common questions
How long does it take to issue a Letter of Credit?
Once the application file is complete, issuance depends on the partner bank's review. Simple credits are often issued within days; complex or confirmed structures take longer. Your consultant will give a timeline at the outset.
What is the difference between a sight and a usance credit?
A sight credit pays when compliant documents are presented. A usance credit pays at a set date after presentation or shipment, giving the buyer time to receive and sell the goods before payment.
Can the credit be confirmed by a second bank?
Yes. Where the seller wants an additional undertaking from a bank in its own country, Finance House can arrange confirmation as part of the structure.
Discuss your transaction with a consultant.
Tell us about the deal, the counterparty and the timeline. We will come back with the instrument and structure we recommend.