This document discusses different types of letters of credit used in international trade. It describes letters of credit as a means of payment security for exporters where payment is made after goods are transported. The document focuses on standby letters of credit, which guarantee payment to the seller if the buyer defaults, unlike regular letters of credit which are payment methods. A standby letter of credit is issued by the buyer's bank to guarantee payment to the seller if the buyer fails to meet the terms of the purchase agreement.

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2. Letters of credit have become one of the most
common means of payment in foreign trade.
Through them, exporters acquire payment
security once the merchandise has been
transported. However, there are many types
of financial instruments and each one has
special characteristics. It guarantees the
payment at different times during the
transaction between the buyer and the seller
which can be available to you via the SBLC
provider.

3. • One of the most common financial
instruments is the standby letter of
credit which, in the event of default
by the buyer, the buyer's bank makes
the payment to the seller on behalf
of its client. In this post, we explain
what a standby letter of credit is
and what its main characteristics
are.

4. A letter of credit is a
document issued by the
importer's SBLC providers
in his name and that gives
the exporter a guarantee
that payment for the
merchandise will be made
once it has been
transported.

5. To demonstrate that the merchandise has been transported, the exporter will
have to send the documents that ensure this operation and, when the
importer's bank receives them, they comply with the agreed conditions, and
make the payment. Letters of credit have become one of the most common
means of payment, with irrevocable letters of credit being the most widely
used.

6. On the other hand, another of
the most common letters of
credit is the standby letter of
credit which, far from
working as a payment
method, is a payment
guarantee in the event that
the buyer faces a setback that
prevents him from carrying
out payment under the agreed
conditions and time.

7. A standby letter of credit is a
document issued by the buyer's
SBLC provider that guarantee
the payment of the operation to
the seller in the event that the
buyer fails to comply with the
agreed agreement.

8. In this way, unlike the other types of letters of credit, it
does not work as a payment method since if the buyer
fulfills his obligations regarding the operation, this
document will not have to be used at any time during the
process.

9. Financial - It guarantees the payment of the merchandise in
accordance with the conditions agreed between the buyer and the
seller.
Of performance - The buyer's bank guarantees payment to a third
party when its customer fails to meet a non-financial contractual
obligation. This type of letter of credit is less common.
Stand-by letter of credit – Characteristics: A document that
guarantees payment to the exporter in case the buyer does not
comply with any agreed agreement.
It also guarantees that the buyer receives the merchandise for which he is
paying.
Unlike other letters of credit, this one does not work as a payment
method.
They are issued by the buyer's SBLC provider.