Letter of credit and Pay down: Difference between pages

From ACT Wiki
(Difference between pages)
Jump to navigationJump to search
imported>Doug Williamson
(Link with Documentary collection page and contrast with Documentary collection.)
 
imported>Doug Williamson
(Create page. Sources: linked pages.)
 
Line 1: Line 1:
(LC).
''Borrowings management''
 
A promise document issued by a bank or another issuer to a third party to make a payment on behalf of a customer in accordance with specified conditions.
 
Letters of credit are frequently used in international trade to make funds available in a foreign location.
 
 
 
==== Letter of credit contrasted with documentary collection ====
Letters of credit are often contrasted, from the perspective of a seller, with an alternative structure of [[documentary collection]]s.
 
A letter of credit is a ''direct'' obligation of a bank to pay (against specified documents).
 
A documentary collection means a bank ''collecting'' payment from the buyer (by presenting documents to the buyer).
 
A letter of credit therefore gives superior protection to the seller against credit risk or delayed cash flow, or both.
 
For this reason letters of credit are more expensive to arrange.


To pay down debt means repaying the principal, in full or in part.




== See also ==
== See also ==
* [[Advising bank]]
* [[Debt]]
* [[Bank payment obligation]]
* [[Pay]]
* [[Clean letter of credit]]
* [[Principal]]
* [[Commercial risk]]
* [[Condition]]
* [[Confirmed letter of credit]]
* [[Confirming bank]]
* [[Credit]]
* [[Documentary collection]]
* [[Documentary credit]]
* [[Irrevocable letter of credit]]
* [[Issuing bank]]
* [[LOC backed]]
* [[Standby letter of credit]]
* [[Trade finance]]
* [[Uniform Customs and Practice for Documentary Credits]]
 
 
===Other links===
[http://www.treasurers.org/node/5279 Letters of credit and supply chain finance, Will Spinney, ACT 2009]
 
[[Category:Manage_risks]]
[[Category:Risk_frameworks]]
[[Category:Trade_finance]]

Revision as of 10:41, 9 September 2017

Borrowings management

To pay down debt means repaying the principal, in full or in part.


See also