The letter of credit standby
|The standby letter of credit is a bank guarantee of payment which is close to the documentary credit except that it is only a guarantee of payment and not a means of payment. It is used only in the event of nonpayment by the buyer. In this case, the seller sends the documents to the bank to be paid immediately.
It is issued as a documentary credit with or without confirmation. However, it may be sent direct to the supplier without going through his bank.
The advantages of the standby letter of credit
ProcessThe implementation is similar to the documentary credit except that the standby letter of credit can be sent directly to the supplier without going through his bank.
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