commercial letter of credit
- A financial tool commonly used in business transactions: an obligation issued by a bank on behalf of a client, usually needed for affirming payments for goods. It often necessitates the recipient to provide a drafted document along with evidence of merchandise shipment or acquisition to request payment
- The supplier was assured of secure payment due to the commercial letter of credit provided by the buyer's bank.
- For international transactions, businesses often utilize a commercial letter of credit ensuring the supplier gets paid upon fulfilling the agreed conditions.
- Despite the risk involved, the manufacturer agreed to the deal as the buyer furnished a commercial letter of credit guaranteeing payment upon evidence of shipment.
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