Irrevocable Letter of Credit
Definition of 'Irrevocable Letter of Credit'
The ILC is irrevocable, which means that the bank cannot cancel it without the consent of the beneficiary. This makes the ILC a very safe form of payment for the beneficiary, as they are guaranteed to receive payment as long as they meet the terms of the letter of credit.
The ILC is also a very flexible instrument, as it can be used to finance a variety of transactions, including the import and export of goods, the construction of projects, and the provision of services.
The ILC is a valuable tool for businesses that need to ensure that they will receive payment for their goods or services. By using an ILC, businesses can reduce the risk of non-payment and focus on their core business activities.
Here are some of the key features of an irrevocable letter of credit:
* It is a binding contract between the bank and the beneficiary.
* The bank is obligated to pay the beneficiary on the presentation of the required documents.
* The ILC is irrevocable, which means that the bank cannot cancel it without the consent of the beneficiary.
* The ILC is a flexible instrument that can be used to finance a variety of transactions.
If you are considering using an irrevocable letter of credit, it is important to speak to your bank or other financial institution to discuss the specific terms and conditions that will apply to your transaction.
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