Letter of Credit

What is a Letter of Credit?

A Letter of Credit promises payment to your company’s supplier, so long as your supplier performs according to your order as specified on the Letter of Credit. A Letter of Credit essentially substitutes the credit of a third party, usually a bank or finance institution, for that of a borrower. This serves three purposes:

Credit

Your supplier gains assurance that it can now ship to you on an open account, instead of demanding T/T payments prior to shipment. Upon shipment, the supplier will present shipping documents and request payment directly from the confirming finance institution and not your company.

Guaranteed Performance

The Letter of Credit guarantees you that the supplier must perform, and perform on time, before it can ask to be paid. If the order is incomplete or late or has any number of various discrepancies, your company has the option to reject the shipment and refuse to pay.

Growth

Letters of Credit allow you to build relationships with new suppliers and obtain the credit needed to allow your company to keep up with the growing demand for your product.

Emason Finance will work with you to open a Letter of Credit with your buyer’s purchase order. In some cases there are some fees to be paid.  The rate of fee payment depends on the nature of the transaction.  These are negotiated once it is established that Emason Finance can help you with your financing needs.