The document outlines the advantages and disadvantages of letters of credit for importers and exporters. For importers, letters of credit reduce risk by requiring documentary proof of shipment before payment. They also provide security and allow for easier business planning. However, they are more costly than other payment methods and are based on documentation rather than physical verification of goods. For exporters, letters of credit minimize credit risk and guarantee payment from the buyer's bank. But they require suppliers to meet all parameters or the bank may reject documents, and they involve additional expenses.