Letters of Credit

With Barclays’ expertise in letters of credit, you can trade in new markets or with new partners with confidence. We provide the documentary support to ensure timely payment or delivery and strengthen your trading relationships.

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What is a letter of credit?

Letter of Credit services allow you to trade with confidence by providing certainty that you’ll be paid for goods you export – or supplied with goods that you’ve paid for.

Export letters of credit are conditional payment undertakings issued by your buyer’s bank on their behalf.

They give you certainty that you will receive payment for the goods you export, provided you meet the terms of the letter of credit.

If you ask us to confirm the letter of credit, you will have protection against payment default by the buyer’s bank.

In addition to being a secure and fast way to receive payment, export letters of credit enable you to manage your cashflow more effectively by giving you a known payment date, currency and amount.
Import Letters of Credit are conditional payment undertakings issued by us to your supplier on your behalf.

They secure payment for your supplier providing they meet the terms of the Letter of Credit – for example, presentation of documents such as a bill of exchange, an invoice, bill of lading or an airway bill.

This gives you more control, which can be a particular advantage when buying from new suppliers.

Import letters of credit can also enhance your trading capabilities by supporting your credit status.

They can also be valuable for negotiating preferential terms such as a longer credit period or lower prices.
You can use LC Discounting if you sell on credit terms using letters of credit as a means of settlement.

LC discounting allows you to receive funds as soon as there is a binding commitment from your buyer’s bank that payment is due on a specific future date.

How it supports your business

Enables you to receive payment sooner – you don’t have to wait for your buyer to pay you

Helps you to improve cashflow by accelerating payment

Gives you the ability to offer your trading partner longer payment terms, which can put you in a stronger negotiating position and improve your relationship

Allows you to pay your suppliers early and can help place you in a position to negotiate better pricing.

What can letters of credit do for your business?

When you enter into new relationships with buyers or suppliers in emerging markets you want to be sure you can trade safely
Gives you the reassurance of a secure, globally recognised method of settling overseas trade
Offers flexibility as we can match your letter of credit to your business needs, to any amount and to any freely traded currency
Allows you to strengthen your trading relationships by offering better credit terms to overseas buyers if you are exporting goods
Enables you to negotiate improved credit terms if you are importing goods, thereby improving your cashflow
Subject to the International Chamber of Commerce’s rules for documentary credits, giving the reassurance of worldwide standards.

Why Barclays Corporate letters of credit solutions?

Using our global network of offices and specialists, we can work with your buyers’ banks or your suppliers to draw up letters of credit to support your export and import activity in any market.

Read the video transcript

A good way to mitigate risk and potentially improve terms is to use letters of credit when both importing and exporting. The key risks to consider when importing will the goods be on time and are they the right quality, by paying upfront or giving a deposit will you get your goods.

If you're exporting will you get paid on time will you lose control of the goods and never hear from the buyer again. A letter of credit is a promise by a bank the payment will be made as long as the right goods are shipped at the right time with the right paperwork it therefore protects both the buyer and the seller to mitigate potential risks.

How can letters of credit save you money? If you're importing against a letter of credit you may be able to extend the payment date as the supplier has a bank promise. This may reduce the need to borrow. If you are exporting a letter of credit can help exporters enter new markets and sell to new buyers which can help cash flow, without the need for a facility. At Barclays, we have specialist teams that are available to help you structure the instrument that will best suit you and your client’s needs.

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Letters of Credit

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