What is a letter of credit and how does it help me in my relationship with a business partner?

The letter of credit is a payment method commonly used in international trade, whereby the buyer’s/importer’s bank undertakes the commitment to make the payment to the seller/exporter, provided the requested documents are presented.

This instrument provides security for both parties: the seller is guaranteed to receive payment for the goods, and the buyer knows that payment is made only based on documents compliant with the letter of credit terms, which certify the shipment of the goods.