Letters of credit are an invaluable resource for businesses operating in today’s global market. Versatile, convenient and secure, a letter of credit helps you to do business internationally with the convenience you’ll only find locally.
Benefits of letters of credit include:
An Import Letter of Credit is appropriate if you are the buyer of goods or services. (Use an Export Letter of Credit if you are the seller of goods or services for your particular transaction.)
The Import Letter of Credit gives you Columbia Bank's promise to provide payment for your transaction, as long as all requirements are met. Our International Banking Department can help structure your Import Letter of Credit to meet your specific needs.
An Export Letter of Credit is appropriate if you are the seller of goods or services. (Use an Import Letter of Credit if you are the buyer of goods or services for your particular transaction.) The Export Letter of Credit has established parameters that must be met for payment to be made.
A Standby Letter of Credit ensures payment in the event of default or non-performance by the applicant in connection with transactions or situations not necessarily involving the movement of merchandise. This instrument typically fulfills the terms of contract, removes the need for cash deposits and can be used for performance and bid bonds, as well as other uses.
Most letters of credit only guarantee payment to a specific beneficiary; however, one beneficiary may transfer a letter of credit to another, who will become the second beneficiary. Transferable Letters of Credit must be designated as such by the issuing bank.
The beneficiary is allowed, through a Transferable Letter of Credit, to ask that the bank transfer part or all of the letter of credit to a separate party (or parties). The "second beneficiary" then receives the same rights as the original beneficiary.
Also referred to as "documentary credit," a Commercial Letter of Credit is issued by a bank that guarantees to pay a specific sum of money in exchange for documents representing the transfer of title to specific merchandise drawn and provided in accordance with pre-negotiated terms and conditions.
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