The letter of credit standby

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
- L / C standby facilitates exchanges that do not have to be formatted as with a documentary credit.
- It allows the seller to accept a simple mode of payment such as bank transfer with the security of the bank guarantee in the background.
- Its cost is low relative to the documentary credit
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Process
The 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.

After receiving the letter of credit, the supplier's bank verifies the authenticity of documentary credit and if it is subject to the UCP (Uniform Customs and Practice). It then checks if the instructions not contain errors.
Upon receipt of the notice, the recipient checks whether the conditions specified in the documentary credit are consistent with what had been established during negotiations. If the beneficiary does not agree with any clause, it must ask the buyer to change the terms.


Next step : Cash against documents →
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P.J.B.
Very precise, informative and easy to understand. Thanks
C.B.
Absolutely welldone
A.
Thanks too much
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