Shoe Maker Interview Question:

What is letter of Credit LC term of payment?

Submitted by: Muhammad

A letter of credit is a promise between businesses to pay. The buyers and sellers contract banks issue letters of credit as a way to ensure that sellers get paid as long as they do what they've agreed to do. The LC is common in international trade even though its more expensive to transact than a T/T, as it guarantees that a payment will be made if certain conditions are met.
Submitted by: Muhammad