12 years ago 12 years ago

What is Standby Letter of Credit?

by BMS Team 12 years ago12 years ago

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Standby Letter of Credit

A standby letter of credit is used as support where an alternative, less secure, method of payment has been agreed. They are also used in the United States of America in place of bank guarantees. Should the exporter fail to receive payment from the importer he may claim under the standby letter of credit. Certain documents are likely to be required to obtain payment including: the standby letter of credit itself; a sight draft for the amount due; a copy of the unpaid invoice; proof of dispatch and a signed declaration from the beneficiary stating that payment has not been received by the due date and therefore reimbursement is claimed by letter of credit. The International Chamber of Commerce publishes rules for operating standby letters of credit – ISP98 International Standby Practices.

exporter, International Chamber of Commerce, letter of credit, United States of America

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What is Standby Letter of Credit?

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