Letters of credit · LC / DLC
Your supplier requires a letter of credit.
A documentary letter of credit gives the seller a payment commitment, conditional on the presentation of documents that comply with its terms. We help you structure it, prepare the request and follow it through to issuance.
When a letter of credit is used
Letters of credit are common when buyer and seller do not yet know each other well, when amounts are significant, or when the seller’s bank or insurer requires it.
First orders with a new supplier
The seller wants security before producing or shipping; the buyer wants payment tied to evidence of shipment.
Equipment and capital goods
Machinery, vehicles or industrial lines, where payment can follow documents such as bills of lading and inspection certificates.
Commodities and bulk goods
Agricultural products, metals or energy products shipped under defined Incoterms and quality documents.
Deferred payment
A usance letter of credit can allow payment at a set date after shipment or presentation, if the parties agree.
Our role
We work on your side as adviser and arranger. The letter of credit itself is issued by a bank, after its own review.
- Review the sales contract, Incoterms and payment clause
- Check the list of documents and the deadlines requested
- Prepare the file and the proposed LC terms
- Coordinate the draft with your counterparty and the institutions concerned
- Follow the exchanges with the bank until the letter of credit is issued
Illustrative example
An importer buying industrial equipment
A distribution company in Côte d’Ivoire agrees to buy packaging machines from a manufacturer in Italy. The manufacturer asks for an irrevocable letter of credit covering 80% of the price, payable against the bill of lading, commercial invoice and inspection certificate.
Before any request is made, the buyer needs to check that the documents listed can realistically be produced, that the shipment dates fit the production schedule, and that the terms match the sales contract. These are the points we review with the client before the request is submitted to the institution.
This scenario is illustrative. It does not describe a transaction completed by Star Alliance Consulting.
What we need to review your request
To start, a summary is enough. Later we will ask for the documents that the review actually requires.
- The goods, quantities and countries of origin and destination
- The amount, currency and expected payment terms (at sight or deferred)
- Your company and its country
- Your supplier’s requirements, if you have them (draft clause, proforma invoice)
- The desired timeline
How the process unfolds
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First exchange
You describe the operation; we ask the questions needed to understand it.
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Review
We review the contract, the documents and the proposed terms, and explain what is realistic.
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Preparation
We assemble the file and the draft text, aligned with the seller’s requirements.
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Coordination
We follow the process with the parties and institutions involved until a decision is reached.
Questions about letters of credit
Is a letter of credit a loan?
No. A letter of credit is a conditional payment commitment, not a credit line or an advance of cash. The institution issuing it will assess the applicant and may require collateral or a cash margin, according to its own policy.
What is the difference between an LC and a DLC?
In practice they refer to the same thing: a documentary letter of credit, where payment depends on the presentation of specified documents.
Which rules apply?
Most commercial letters of credit are subject to the ICC Uniform Customs and Practice for Documentary Credits (UCP 600). The text of the credit itself defines the documents and conditions.
How long does it take?
It depends on the completeness of the file, the parties involved and the institution’s internal process. We give you an indication once we have reviewed the operation; we do not promise fixed issuance times.
Have a transaction that needs an LC, SBLC or guarantee?
Tell us about it in a few lines. We will reply with an honest view of the options and the next steps.
Or write to us at info@starallianceconsult.com