Letter of Credit (L/C)

Bank-guaranteed payment method. Bank pays seller when documented conditions are met.

Definition

Bank-guaranteed payment method. Bank pays seller when documented conditions are met.

Why It Matters for Importers

Understanding Letter of Credit (L/C) is essential for anyone sourcing products from China. This term is commonly used in trade negotiations, shipping documentation, and supplier communications. Having a clear understanding helps you:

Communicate more effectively with suppliers and freight forwarders
Make informed decisions about shipping and logistics
Avoid misunderstandings that could lead to delays or additional costs

Related Terms

LCL

Less than Container Load - Sharing container space with other shippers. Good for smaller shipments.

Lead Time

Time from order placement to shipment. Includes production time plus any pre-production preparation.

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