Letter of Credit
The Letter of Credit is a written undertaking of the bank on the instructions of its customer (the buyer).
In the Letter of Credit, the bank guarantees to pay a specific amount of money to the beneficiary (seller) of the letter against the documents stipulated in the Letter of Credit.
The Letter of Credit is issued in accordance with the customer’s application within 3 working days after the processing of security in the bank.
Nordea bank can send the Letter of Credit to any bank in the world.
- Transaction security, because the bank will effect payment only if the documents confirm that the terms indicated by the buyer and international regulations are fully met.
- The buyer can be taken on trust therefore the seller may agree to more favourable terms of payment (do not require advance require, defer payment).
- The guarantee that the goods will be delivered in accordance with the terms of the Letter of Credit.
- The buyer receives all the commercial documents claimed in the Letter of Credit in specified period of time.
- Management tool: specific delivery time, submission of certain documents, administration of payment etc.
- The bank has guaranteed the payment.
- The seller is not dependent on the buyers desire or capacity to pay for the delivered goods.
- Specified payment date.
- Security that the order will not be cancelled or changed without the agreement of the seller.
- Consultations provided by the bank about handling of commercial documents.
- The receiver of Letter of Credit issued by Nordea Bank AB Latvia branch enters into engagement of Nordea Bank AB effect payment against the documents stipulated in the Letter of Credit.
- Possibility to receive Nordea financing.