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Export Letters of Credit

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A method of payment commonly used in international trade transactions, whereby the Issuing Bank promises to pay the Exporter – provided the Exporter complies with the terms and conditions of the Letter of Credit. A Letter of Credit may also be referred to as a Documentary Credit.

 

Features

  • Irrevocable Letters of Credit cannot be cancelled or changed without the consent of all parties involved (Exporter, Importer, and the Issuing Bank).
  • Foreign Issuing Bank and country risk can be mitigated via confirmation of the Letter of Credit.
  • May be payable upon presentation of certain documents (sight) or at a future date after documents have been accepted under the Letter of Credit (term or usance).
  • Can be transferred to a third party if stipulated in the Letter of Credit.
  • The Letter of Credit should be consistent with the terms and conditions stipulated in the commercial contract.
  • Letters of Credit can be advised electronically via TDfacilitrade Online Service, email, or SWIFT MT798.

Benefits

  • Exporter is assured of receiving payment if it complies with all terms and conditions of the Letter of Credit.
  • Under a Letter of Credit, the Exporter relies upon the creditworthiness of the Issuing Bank and not that of the Importer.
  • Term/Usance Letters of Credit can be discounted upon acceptance of drafts thereby expediting cash flow.
  • Exporters may offer extended payment terms if payment is through a Letter of Credit.
  • Electronic notification of Letters of Credit through TDfacilitrade Online Service or SWIFT MT798 eliminates illegible copies of Letters of Credit and provides a central database.
    • Registration for TDfacilitrade Online Service is available at no additional cost above advising fees.

Requirements

  • Contact your Relationship Manager for a complete registration package for TDfacilitrade Online Service.
    December 18, 2017
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