Letters Of Credit (LC)
Letters of Credit (LC)
Our Letters of Credit (LC) insure your vendors that they will be paid on time. The LC tells them how they will be paid and explains that Jhanira Capital Funding is in a position to ensure timely payment. When vendors’ minds are at ease, they often eliminate pre-payment and C.O.D. requirements, and extend payment terms. By not having to pay your vendors up-front, your company has more flexibility to pursue increased sales and other financial goals.
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This LC is a recognized instrument issued by Jhanira Capital Funding (funding source) on behalf of its client, the purchaser. The LC actually represents the funding source guarantee to pay the seller, provided the conditions specified on it are fulfilled.
The rationale behind the use of a LC is reliance by the seller on the credit worthiness of the funding source, which is normally more reliable than that of the purchaser. It is also easier to verify by the seller’s funding source. Moreover, this vehicle can be structured to protect the purchaser because no payment obligation arises until the goods have been satisfactorily delivered as promised.
The conditions of the LC are spelled out on the LC itself. When the conditions of delivery have been satisfied (usually by the documented, satisfactory and timely delivery of the goods), the purchaser’s funding source makes the required payment directly to the seller’s financial funding source in accordance with the terms of payment (in 15, 30, 60 or 90 days, whichever is specified).
The greatest degree of protection is afforded to the seller when the LC has been issued by the buyer’s funding source and confirmed by the seller’s . LCs may be utilized for one-time transactions, or they can cover multi-shipments, depending upon what is agreed between the parties.
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