Payment
L/C explained
Letter of Credit
A bank-backed payment undertaking released against compliant documents; worth the cost above ~USD 50,000.
Full definition
An L/C substitutes bank credit for counterparty credit: the supplier is paid only when it presents documents that match the terms (bill of lading, commercial invoice, packing list, certificate of origin). For you, an L/C at sight means payment tracks shipment, and strict document clauses force the supplier to ship as agreed. Bank fees run roughly 0.3–0.5% — cheap insurance on a first large order.
Worked examples
L/C at sight, 90-day expiryL/C 30 days from B/L date
Related terms
Seeing L/C in your contract and unsure how to handle it?
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