Learn how letters of credit work, the roles of buyers, sellers, and banks, and why these financial tools help reduce risk and ...

Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia. Khadija Khartit is a strategy, investment, and funding expert, and an educator of fintech ...

Letters of credit are legal instruments providing a financial guarantee. They assure a beneficiary that payments will be made or nonfinancial obligations performed by a seller or provider. Standby ...

A letter of credit guarantees payment to sellers in international trade. Not all letters of credit are transferable; terms vary. Letters of credit differ from lines of credit, mainly not involving ...

Accounting for a letter of credit on your balance sheet depends on when you use it. One issued by your financial institution acts as a credit substitute. That institution, often a bank, steps into ...