Letter of Credit (L/C)
A letter of credit is the issuing bank's written undertaking to pay the seller once documents that comply with the credit's terms are presented, usually under the ICC's UCP 600 rules. Commonly required documents are the B/L, commercial invoice, packing list, certificate of origin and insurance policy. Banks examine documents, not goods, so a small difference such as a misspelt name or shipment date can be treated as a discrepancy and delay payment.
Related terms
- Bill of Lading (B/L)
A bill of lading is the ocean transport document issued by the carrier or its agent.
- Commercial Invoice
A commercial invoice is the seller's bill to the buyer, listing the goods description, HS code, quantity, unit price, total value, currency and Incoterms rule.
- Incoterms
Incoterms are the ICC rules that set the delivery point, the transfer of risk, and the split of costs and customs duties between seller and buyer.
- Certificate of Origin (COO)
A certificate of origin states the country where goods originate.
Covered in these guides
Export and Import Documents in Indonesia: What You Need, Who Issues It, When
A practical guide to Indonesian export and import documents, from invoice, packing list and B/L to SKA, PEB/NPE, PIB/SPPB, quarantine certificates and the DO.
6 min read Export-importIncoterms 2020 Guide: All 11 Rules for Exporters and Importers
The 11 Incoterms 2020 rules explained, with a cost and risk transfer table, FCA vs FOB for containers, CIP and CIF insurance and how to choose the right rule.
6 min read