International Freight Forwarding: Letter of Credit The letter of credit abolishes financial risks for you, the distributor, as well as the manufacture. When a distributor confirms an order, a letter of credit is made from his company’s bank to your bank. This letter confirms the distributor’s funds are available to cover the costs you quoted. A letter of credit that is irrevocable guarantees that the order won’t be cancelled at any given time. Likewise, when your bank confirmed the letter of credit, the distributor is guaranteed of delivery. Once it is confirmed by the bank, currency exchange is also confirmed. This spares you from worrying about currency fluctuation. The bank basically holds the money until every necessary shipping document is prepared and presented. The letter states the terms and conditions in making it legitimate and negotiable into money, often holding for proof of moving goods. Your international freight forwarder helps you obtain all those important documents. Once you hand them to the bank, the letter of credit is converted into liquid assets you can use to pay the manufacturer and settle all other billings from your transaction. Never ever do business on promises. Otherwise, you are taking big risks and at the same time create risks for the people you’re involved with. The only certain way to transfer payments is through a letter of credit. To reduce risks in your export/import business, work only with a reliable and honest international freight forwarder Perth. Simply click on the given link to get a quote.