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A Letter of Credit promises payment to your company’s supplier (international and/or domestic), so long as your supplier performs according to the terms as specified on the Letter of Credit.

Terms are subject to imagination and negotiation and can therefore be tailored for each deal. For instance, you might agree with your supplier that a neutral third party checks the quality of the goods shipped from their place of origin.

A Letter of Credit essentially provides the deposit or costs for manufacture/supply of goods while also protecting your deposit from losses incurred through non delivery or damage.

Key Benefits

• Letters of Credit are not determined by your credit history or the value of your assets
• Your supplier gains assurance that it can now ship to you on an open account (credit), instead of demanding payments prior to shipment.
• Upon shipment, the supplier will present shipping documents and request payment directly from AR Cashflow, not your company.
• The Letter of Credit guarantees you that the supplier must perform, and perform on time, before it can ask to be paid. If the order is incomplete or late or has any number of various discrepancies, your company has the option to reject the shipment or refuse to pay.

Letters of Credit allow you to build relationships with new suppliers and obtain the credit needed to allow your company to keep up with the growing demand for your product.

Why use AR Trade Finance for Letters of Credit

Opening a Letter of Credit with a bank requires either that your company qualify for a conventional line of credit, or that you secure the Letter of Credit with cash.

Many companies in need of Trade Finance do not meet the prerequisites of bank lines. The ones that do prefer not to allocate a large sum of the line to secure the Letter of Credit when the resource can be used more productively elsewhere.

Put simply, most companies would certainly rather have cash available for more important needs than have it sit idle with a bank to secure a Letter of Credit.

When you chose AR Cash Flow you get one-on-one service. Through experience, we know that every client situation is unique, and we will work with you to ensure that any letter of credit issued best meets the specific goals of each and every transaction.