My business is looking at importing and exporting, what is a standby letter of credit?

Last Updated: 21 Jun 2016

Exporters and importers can use a standby letter of credit as a backup which only activates in the event of non-performance or default in the original transaction. It is used to demonstrate the buyers’ reliability and trustworthiness, particularly where an existing business relationship exists. It’s also a means to reduce administration costs of frequent documentary letters of credit.

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