Letter of Credit
January 15, 2014 | | Kris Tabetando | 0 Comment
In a business transaction between a buyer and seller, a letter of credit is a legal document issued by a bank indicating to the seller that the buyer can and will make the payment to the seller in accordance with the agreed-upon terms between the buyer and seller.
Letters of credit are important tools in cross-border transactions where a buyer and seller don’t know each other well. As such, it is difficult for the seller to assess the buyer’s creditworthiness. In the event that the buyer does not make the payment, the bank is liable for making the payment.
Author: Kris Tabetando
Kris Tabetando provides mergers & acquisitions (M&A) advisory and brokerage services to Internet companies. He also partners with investors to acquire & manage Internet businesses.
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