Commercial Letters of Credit

Reduce your risks when doing business internationally

Commercial Letters of Credit are designed to ensure that payments to or from overseas sources are transmitted and received on a proper and timely basis, so that both the buying and selling parties are mutually satisfied.

How It Works

  • Conditions typically involve:
    • Presentation of documents showing shipment has been made (i.e. negotiable bills of lading)
    • Insurance documentation
    • Invoices and Inspection certificates
  • Two forms of payment:
    • Sight payments demand immediate disbursement when the required documents are presented, examined and approved
    • Time payments delay payment until a future date following document approval and release
  • Letters of credit also specify details on the purchase or sale of goods including price, required shipping documents, payment terms, shipping terms, time frames and other transaction details contained in the underlying contract
  • Import letter of credit — Issuing bank substitutes its credit standing for yours or that of your business resulting in enhanced purchasing power, reducing the seller’s risk and improving cash flow
  • Export letter of credit — The foreign bank substitutes its credit standing for that of your buyer, reducing your risk and improving cash flow

How First Citizens Can Help

  • Issue import letters of credit, ensuring compliance with International trade practices
  • Carefully examine all documents to ensure compliance with the letter of credit
  • Make payment only when documentation conforms to the terms of the letter of credit
  • Consult with you on the proper structure of letters of credit and relevant documentation
  • Provide you with competitive rates and industry expertise