Export Letters of Credit
Secure Your Export Sales and Minimize Your Financial Risk
As an exporter, you need to consider the credit risk of your foreign buyer. Business practices and conditions in foreign markets are beyond your control and it's not always practical, or possible, to request advance payments for your goods or services.
Structuring a letter of credit is an excellent way to help ensure your company is paid for its exported goods or services.
RBC can provide you with the advice and expertise necessary to take advantage of this widely accepted and commonly used international trade payment method.
Providing Peace of Mind
An export letter of credit is a document issued by a major bank on behalf of the importer, or buyer. The letter of credit constitutes a promise to pay the seller, or exporter, upon receipt of goods or services, provided the terms of the letter of credit have been met.
By insisting that a letter of credit is issued for your transaction, you can:
- ensure that you are paid - even if the buyer fails to pay, the bank that issued the export letter of credit is obliged to pay for your goods or services if your documents comply to the letter of credit
- enhance your cash flow - even if the payment terms allow the buyer 30 days to pay, RBC can pay you immediately, less a small discount fee
- provide greater security of payment if confirmed by RBC - this means that even if the buyer and the issuing bank refuse to pay, RBC will pay your company if your documents comply to the letter of credit
Structuring an Export Letter of Credit
Incorporating an export letter of credit for your international sale is a simple way to help guarantee payment for your goods or services.
For more information about how our international trade solutions can benefit your business, contact an international trade specialist.
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