Letters of Credit

A Letter of Credit [L/C] is a great business tool for importers to protect their own, as well as their supplier's interests. An L/C is essentially a bank guarantee for payment of supplied (imported) goods. It is often at the request of the overseas supplier that payment for goods are made in advance to protect them from default on payments.

While OzForex doesn't issue L/Cs, we can help you save money on the foreign exchange transfer involved.

A simplified L/C process would take place as follows:

  1. Buyer and seller agree terms of trade (price, specification, shipping etc.).
  2. Buyer applies for L/C from issuing bank.
  3. Issuing bank sends L/C to supplier's bank.
  4. Supplier sends goods to importer.
  5. Assuming agreed terms are met, issuing bank pays supplier.

Now here's where OzForex comes in...

Ordinarily, the issuing bank would debit the importer's account in their local currency, and convert it at the bank's chosen rate to pay the supplier in the foreign currency. By advising their bank not to proceed with the debit of their bank account, an importer can have OzForex make the conversion. Payment would then be made to the issuing bank in the foreign currency. OzForex does not charge extra for this service, and savings can be substantial. Payments for L/Cs still attract the same competitive OzForex rates.

Please contact us for more details or fill in the form below.

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IMPORTANT: This information has been prepared for distribution over the internet and without taking into account the investment objectives, financial situation and particular needs of any particular person. OzForex makes no recommendations as to the merits of any financial product referred to in this website, emails or its related websites. Please read our Product Disclosure Statement and our Financial Services Guide.

DISCLAIMER: OzForex makes no warranty, express or implied, concerning the suitability, completeness, quality or exactness of the information and models provided in this web site. Read full disclaimer.

OzForex provides international money transfer services to private clients and business customers. Use our free currency converter, exchange rate charts, economic calendar, in-depth currency news and updates and benefit from competitive exchange rates and outstanding customer service.

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