Letters of Credit

Specialist Department for Multi-Modal Transport

A Letter of Credit is a secured third party payment given by a financial institution to your company’s supplier, as long as your supplier fulfils their performance according to your specified order.
This serves three purposes:

1 Credit
Your supplier gains assurance that it can now ship to you on an open account, instead of demanding Telegraphic Transfer (TT) payments prior to shipment. The supplier will present the necessary shipping documents and request payment directly from International Trade Finance, not your company.

2 Guaranteed Performance
The Letter of Credit is your guarantee that the supplier must perform on time before it can ask for payment. If the order is incomplete or late or has any number of various discrepancies, your company has the option to reject the shipment and refuse to pay.

3 Growth
Letters of Credit allow you to build relationships with new suppliers and obtain the credit needed to allow your company to keep up with the growing demand for your product.

Opening a Letter of Credit with a Bank requires either that your company qualifies for conventional line of credit, or that you secure the Letter of Credit with cash. Many companies in need of Purchase Order Finance do not meet the prerequisites of bank lines. The customers that do meet these prerequisites prefer not to allocate a large sum of the line to secure the letter of credit when the resource can be used more productively elsewhere. Most companies would certainly rather have cash available for more important needs than have it sit idle with a financial institution.

At Aerona Air & Sea Customs Clearing Agents Ltd we have our own in house professionals that are fully conversant in the process of obtaining and delivering efficiently. All customers will be notified at each stage of the process and assured that their Letters of Credit are being dealt with by professionals.

Our experienced staff will be responsible for handling and monitoring the documentation against the consignments specifications and terms and conditions of the Letter of Credit.