A commercial letter of credit is a bank document that guarantees your supplier will be paid.
For example, a Canadian furniture importer arranges a commercial letter of credit through its bank so that an overseas manufacturer receives guaranteed payment upon presenting shipping documents — reducing the supplier's risk and enabling the trade deal to proceed.
Why it matters: It mitigates the immense risk of international trade by substituting a bank's creditworthiness for the buyer's.
.avif)
.svg){kind=small}